GBP/USD outlook: the pound falls to three-year lows ahead of Brexit battle in UK parliament

Slobodan Drvenica Windsor Brokers

GBP/USD

Cable broke below psychological 1.20 support in early European trading on Tuesday, as persisting Brexit turmoil maintains negative sentiment and keeps pound under strong pressure.
The pair hit new lowest level since early Oct 2016 and threatens for break below 1.1930 (10 Oct 2016 flash crash low), loss of which would trigger significant bearish acceleration and expose levels last traded in 1985.
All eyes are on UK parliament, as lawmakers will meet today in attempts block no-deal Brexit scenario as PM Johnson called for snap election on 14 Oct.
The opposition is trying to pass the legislation to force the government to stop divorce without deal, with possibilities of further three-month Brexit extension.
Bearish studies on daily chart add to negative outlook on political chaos, as 14-d momentum eventually broke into negative territory and heads south, along with other indicators, but deeply oversold stochastic warns that bears may take a breather before final break below 1.1930 pivot.
Broken 1.20 support and former low at 1.2015 (12 Aug) now revert to initial resistance, followed by session high at 1.2068.
Potential upticks are expected to offer better opportunities to re-enter bearish market, while only break above falling 20DMA (1.2138) would put bears on hold.

Res: 1.2000; 1.2015; 1.2068; 1.2100
Sup: 1.1967; 1.1930; 1.1902; 1.1832

Interested in GBP/USD technicals? Check out the key levels

1. R3 1.2288
2. R2 1.2232
3. R1 1.2149
PP 1.2092
1. S1 1.201
2. S2 1.1953
3. S3 1.187

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

GBP/USD declines toward 1.3500 as markets turn risk-averse

GBP/USD comes under bearish pressure and declines toward 1.3500 on Tuesday. The UK ILO Unemployment Rate held steady at 4.9% in the three months to June, against a forecast of 4.8%, while Employment Change arrived at 83K in the same period versus 147K previous. Weak UK labor data, combined with the risk-averse market atmosphere amid a re-escalation of tensions in the Middle East weigh on the pair.

EUR/USD retreats below 1.1600 on modest USD recovery

EUR/USD struggles to gain traction and trades below 1.1600 in the second half of the day on Tuesday, even after the data from the Eurozone and Germany highlighted improving economic sentiment in August. The US Dollar (USD) benefits from the risk-averse market atmosphere as tensions in Middle East remain high, making it difficult for the pair to turn north.

Gold sticks to losses below $4,400 as USD recovers further from two-month low

Gold remains depressed below the $4,400 mark through the first half of the European session, snapping a two-day winning streak amid a broadly firmer US Dollar. Inflation risks stemming from higher oil prices back the case for at least one interest rate hike by the US Federal Reserve in 2026.

Pi Network holds steady amid app studio costs surge to push user adoption

Pi Network extends a consolidation range capped below $0.0900 holding above the $0.0839 support level. PI token remains under pressure as the Core Team pushes for real user adoption by raising costs for AI-powered app creation, effective from August 24. Leverage-linked risk exposure eases as Open Interest declines despite an increase in social interest.

Fiscal concerns and doubts on Fed independence send US yields to long-term highs

US Treasury yields keep rising across the curve this week, with the yield for the 30-year Treasury bond reaching its highest level since 2007, during the global financial crisis, at 5.33% so far on Monday. A mix of concerns about the ballooning US fiscal deficit and growing doubts about the Federal Reserve’s Independence are increasing pressure on US Government Bonds.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.