- DXY trades higher in Asia.
- Brexit negotiations back in focus.
- Eyes on UK jobs, FOMC minutes.
The bearish grip tightened on the GBP/USD pair in the Asian session, as the bears extended the overnight sell-off amid a pick-up in the USD strength and a non-event BOE Governor Carney’s speech.
GBPUSD losing sight of 1.40 handle?
The spot is seen accelerating its declines, now looking to test the next support of 1.3959 (Monday’s low), as the renewed concerns over the EU-UK trade deal hit the GBP markets, after the sources said that the British senior officials are working on a contingency plan to hold the Brexit cash if the EU refuses to trade. This indicates that the UK is already aware that the sentiment could turn sour should the Brexit negotiations go wrong.
Meanwhile, the weekend’s comments from European (EU) Parliament’s Chief Brexit coordinator Guy Verhofstadt continue to weigh on the investors’ minds. Verhofstadt noted that the UK's Brexit trade deal with the EU will not be finalized before exit day.
Moreover, broad-based US dollar buying amid rising Treasury yields and thin markets also collaborate to the latest leg down in Cable. The USD index trades +0.20% higher at 89.26, looking to test three-day tops of 89.36 reached a day before while the shorter-duration -2-year Treasury yields rally +1.53% to 2.223%, the highest levels seen since 2008.
Later today, the major will look forward to the UK Brexit Secretary Davis’ comments, as he is scheduled to outline a fresh Brexit trade deal plan. Also, of note remains the UK CBI industrial order expectations data, as the focus shifts towards the UK jobs and FOMC minutes due on the cards later on Wednesday.
GBPUSD levels to watch
According to FXStreet’s Chief Analyst Valeria Bednarik, “the pair trades with a modest bearish bias, despite its latest bounce, as the pair is below its 20 SMA and the 50% retracement of its latest decline, while technical indicators hover directionless right below their mid-lines. The daily low was set at the 38.2% retracement of the mentioned decline, making of the level a key support, with a break below it opening doors for a steady decline for this Tuesday. Support levels: 1.3960 1.3920 1.3880. Resistance levels: 1.4025 1.4050 1.4085.”
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