GBP/USD drops from weekly hurdle towards 1.4100 amid options market flip-flops, Brexit woes

GBP/USD fails to extend Friday’s recovery moves, holds lower ground.
Weekly risk reversal drop back to favor sellers, US President Biden ready to interfere in Brexit issue.
Pullback from immediate resistance line drags the quote towards 13-day-old horizontal support.

Anil Panchal FXStreet

GBP/USD grinds lower around 1.4145, down 0.12% intraday, heading into Monday’s London open. In doing so, the cable fades Friday’s bounce off monthly low amid mixed concerns relating to the options market players as well as risk catalysts, mainly relating to Brexit.

The expectations that US President Joe Biden will back European Union (EU) over the Northern Ireland (NI) protocol join the uncertainty over the Fed’s next move to weigh on the market sentiment. The same put a safe-haven bid under the US dollar and drags the GBP/USD prices. Furthermore, doubts over the UK’s June 21 unlock deadline also drag the quote.

On the same line were dwindling risk reversal. After snapping a two-week run-up by the May-end, GBP/USD risk reversal, a measure of the spread between call and put prices, again turns positive with a +0.025 level. However, the daily print again turns red on Monday, suggesting escalating bearish bias of the options market traders.

In addition to the fundamentals and options market signals, the pair’s U-turn from a one-week-old falling trend line amid receding bullish bias of the MACD also keep GBP/USD sellers hopeful.

Though a horizontal area from May 19 and 200-SMA, respectively around 1.4100-4090 and 1.4050, will challenge the pair’s further downside.

Meanwhile, an upside clearance of 1.4165 trend line hurdle should trigger the run-up to the monthly peak, also the highest since April 2018, near 1.4250.

Overall, GBP/USD bulls struggle around the multi-month top but aren’t out of the woods.

GBP/USD four-hour chart

Trend: Pullback expected

Additional important levels

Overview
Today last price	1.4144
Today Daily Change	-17 pips
Today Daily Change %	-0.12%
Today daily open	1.4161

Trends
Daily SMA20	1.4144
Daily SMA50	1.3965
Daily SMA100	1.3899
Daily SMA200	1.3552

Levels
Previous Daily High	1.42
Previous Daily Low	1.4083
Previous Weekly High	1.4249
Previous Weekly Low	1.4083
Previous Monthly High	1.4234
Previous Monthly Low	1.3801
Daily Fibonacci 38.2%	1.4155
Daily Fibonacci 61.8%	1.4128
Daily Pivot Point S1	1.4096
Daily Pivot Point S2	1.4031
Daily Pivot Point S3	1.3978
Daily Pivot Point R1	1.4213
Daily Pivot Point R2	1.4265
Daily Pivot Point R3	1.433

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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