GBP/USD: Heavy around 1.3160 as Brexit uncertainties loom in risk-off markets

The risk aversion backed by trade negative news grabs trader attention amid doubts over the break of Brexit deadlock.
50-day SMA acts as immediate support with 1.3180 and 1.3200 being adjacent resistances.

Anil Panchal FXStreet

In spite of its latest recovery, the GBP/USD pair still weigh heavy near 1.3160 during the early Asian session on Monday. The cable falls back from its Friday’s closing around 1.3180 amid Brexit uncertainties and broad risk-off sentiment.

The overall decline of the US Dollar (USD) after the US employment data propelled the pair beyond 50-day simple moving average (SMA) and to the four-week high.

However, doubts concerning the smooth Brexit still loom large over the British Pound (GBP) buyers.

The UK Prime Minister Theresa May is trying hard to gain the opposition Labour party’s support for her upcoming Brexit deal. The Times recently reported that PM May will outline plans for a comprehensive but temporary customs arrangement with the EU lasting until the next general election, which Corbyn will be able to depict as a Tory cave-in to his demands.

However, The Guardian came out with a news report suggesting that the opposition leader Jeremy Corbyn might not be able to get full support from his party if he chooses May’s plan influenced by the EU customs agreement.

Additionally, tweets from the US President Donald Trump triggered risk-off sentiment during early-day. President Trump threatened to levy higher duties on Chinese goods’ imports in a strategy to push the dragon nation towards his demands ahead of a crucial talk this week.

The barometer of global risk-sentiment, the US 10-year note, offered mostly unchanged interest of 2.53% during the early morning.

It should also be noted that there are no major releases from the US and the UK markets are closed for May Day.

Technical Analysis

Not only Friday’s high near 1.3180 but late-March and early-April tops surrounding 1.3200 could also limit the pair’s immediate upside, a break of which can accelerate recent upside to January month high near 1.3220 and then to 1.3280 resistances.

Meanwhile, 1.3120 and 50-day simple moving average (SMA) at 1.3110 can offer nearby support ahead of 1.3080, 1.3030 and 100-day SMA near 1.2990.

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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