GBP/USD circling 1.3250, churning on Brexit concerns, revamped trade concerns

Sterling spins out an inside day from Tuesday ahead of a quiet London session.
Trade fears have returned to broad markets, but the GBP is already softened after continued Brexit fears.

Joshua Gibson FXStreet

The GBP/USD is cycling around 1.3250 through the week's action, with Tuesday contracting into an inside day after Monday's bearish push following the resignations of five cabinet members on Sunday over Prime Minister May's latest Brexit proposal.

Brexit concerns have dragged the Sterling lower once again, and five key members of the UK's parliament resigned from their posts within the UK's Brexit department at the outset of the trading week, decrying Prime Minister Theresa May's latest "third option" Brexit proposal, an agreement made at the last Exchequers meeting that the UK's Boris Johnson called a betrayal of the original Brexit referendum results, before formally handing in his resignation as the UK's Foreign Secretary. Britain's Brexit Minister David Davis also resigned from his position, along with three other members of the parliamentary Brexit team.

Tariff headlines for Wednesday have seen broader market sentiment swing to the downside as the US prepares to bring further tariffs to bear on China, targeting a further $200 billion USD in Chinese goods after Friday's round-turn set of tariffs by each country saw both sides refusing to back down from their brewing trade war.

Wednesday has a thin schedule set for the GBP, with only the NEISR GDP Estimate for the three months into June expected at some point through the day, and forecast at 0.3% (last 0.2%), with June's RICS Housing Price Balance due late in the day at 23:01 GMT, and forecast at -2% versus the previous reading of -3%.

GBP/USD levels to watch

The Sterling is middling across the technical landscape, and as FXStreet Chief Analyst Valeria Bednarik noted, "the 4 hours chart for the pair presents a neutral to negative stance, as it met selling interest at around 1.3300, where the pair also has the 200 EMA, and now trades around a flat 20 SMA. In the same chart, technical indicators turned lower, but now lacking directional strength and within neutral levels. The pair has an immediate support around 1.3220, where it bottomed several times during the last few hours, with a break below it, increasing chances for a bearish extension this Wednesday."

Support levels: 1.3220 1.3190 1.3155

Resistance levels: 1.3285 1.3320 1.3365

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

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