GBP/USD challenges 1.2800, monthly lows, ahead of Brexit debate

Cable comes under extra selling pressure near 1.28.
House of Commons will discuss amendments later today.
US Retail Sales, Producer Prices coming up next.

Pablo Piovano FXStreet

The Sterling remains on the defensive for yet another session and is now forcing GBP/USD to the area of monthly lows in the 1.2800 zone.

GBP/USD looks to Brexit discussions

The pair is retreating for the second session in a row today to levels last seen in mid-January around the 1.2800 handle, always in tandem with unabated uncertainty around Brexit and the underlying constructive stance in the buck.

Speaking about Brexit, the House of Commons will discuss later today amendments put forward by the Labour Party, the SNP and Tory MP A.Soubry. Consensus, however, is leaning towards a generalized rejection from MPs.

Moving forward, US Retail Sales and Producer Prices will be the salient releases later in the session, while UK Retail Sales are expected tomorrow.

What to look for around GBP

The British Pound is expected to remain under increasing pressure as we get closer to the March 29 deadline and there is still not a hint of a solution to the EU-UK divorce, where the Irish backstop stays in centre stage and a ‘hard Brexit’ scenario is not totally ruled out. Extra weakness hitting the Sterling also comes from deteriorated fundamentals in the UK, the persistent downtrend in inflation as well as lower growth forecasts, as per the latest BoE event.

GBP/USD levels to consider

As of writing, the pair is losing 0.31% at 1.2804 and a breach of 1.2798 (low Feb.14) would pave the way for a visit to 1.2668 (low Jan.15) and finally 1.2476 (2018 low Dec.12). On the upside, the next hurdle aligns at 1.2883 (100-day SMA) followed by 1.3000 (high Jan.17) and then 1.3015 (200-day SMA).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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