GBP/USD: On the back foot around 1.2130 amid Brexit pessimism

With the fresh blow to British PM’s expectations of a deal with the EU, the GBP/USD pair declines to 1.2126 on Tuesday morning in Asia.

In an effort to push the EU over Brexit negotiation table, the UK Prime Minister (PM) Boris Johnson wrote a four-page letter to the region’s leader Donald Tusk offering alternative arrangements of the Irish backstop. However, the EU firmly said, as per The Guardian, that the withdrawal agreement is not open for renegotiation and the backstop is not open for change.

Previously, the British PM arranged a long call with his Irish counterpart Leo Varadkar for renegotiation on the Irish backstop issue. Though, no positive results could be spotted at the end.

Also, the opposition Labour party, together with some Tory rebels, stand ready to topple the PM Johnson with a no-confidence vote as soon as the Parliament resumes during early September. It should be noted that there prevails a lack of accord upon who will become the interim PM if they succeed to force Mr. Johnson out.

On the other hand, the UK leader has cordial support from the US during a call with the US President Donald Trump, as per The Sun.

While major attention will be given to the PM Johnson’s EU visit and the Jackson Hole Symposium, intermediate trade/political news will be looked closely amid the absence of major catalysts.

Technical Analysis

A downside break of 10-day exponential moving average (EMA) level of 1.2120 can drag prices to eight-day-old rising support-line at 1.2085 now. Alternatively, 1.2210/15 area including August 06 high and July 29 low can keep the quote’s short-term increase capped.