GBP/USD: Offered below 1.3200 ahead of Brexit showdown

With the Brexit grapevine occupying news off-late, GBP/USD stays depressed near 1.3140, down 0.12% on a day while heading into Tuesday’s London open. Other than the fears of no-deal departure, risk reset and a light calendar also helps the Cable sellers to keep the reins before policymakers from the European Union (EU) travel the UK for the eighth round of trade negotiations.

Although UK’s Environment Secretary George Eustice downplayed chatters surrounding major changes in the Brexit agreement, the EU diplomat Michael Barnier shows readiness to walk out of the trade negotiations, per UK Express, if that comes. On the other hand, Ireland’s Foreign Minister placates traders while asking to not overreact to the news that the Tories may seek to undermine the Brexit withdrawal agreement. Even so, the Irish diplomat warns Boris Johnson and Company over any such action. This raises the fears of further losses to the British funds after witnessing a record outflow of $1.6 billion in three months to August amid such pessimism.

Elsewhere, the UK’s coronavirus (COVID-19) cases ease from the highest since May of 2,988 to 2,948 while also cutting down on the virus-led restrictions from Northern England. Furthermore, BOE’s Chief Economist Andy Haldane praised the British recovery from the virus-hit times and pushed for the end of the furlough scheme.

On the other hand, American markets were closed on Monday but the US dollar index printed a five-day winning streak as the rush to risk-safety continued amid the Beijing-Washington tussle. Also helping the greenback could be concerns of the European Central Bank’s (ECB) bias.

Moving on, the pair traders will keep eyes on the Brexit talks and how the US traders react to the latest risk moves as the GBP/USD risk reversal suggest the most bearish bias in seven weeks.

Technical analysis

Considering Monday’s weakness past-21-day SMA amid normal RSI conditions, the GBP/USD pair sellers are likely to target a short-term ascending support line near 1.3120 but the late-August lows near 1.3060 may restrict the quotes’ further weakness. Meanwhile, an upside break of 21-day SMA, currently around 1.3190 will need to cross the August 19 high of 1.3267 to recall the buyers. However, 1.3200 may offer an intermediate halt during the rise.