GBP/USD Price Analysis: Downside resumes towards 1.3425 amid Brexit woes
- GBP/USD reverses Friday’s rebound, two-month lows back in sight.
- Cautious BOE, USD bounce and Brexit woes weigh on the cable.
- Bearish daily RSI points to more weakness on the cards.
GBP/USD is reversing Friday’s swift pullback, as the bears fight back control, looking to retest the critical demand area around 1.3425.
The mixed market sentiment combined with escalating Brexit concerns take the wind out of GBP/USD brief recovery from two-month lows of 1.3424 reached Friday. Brexit News: UK appears set to trigger Article 16
Meanwhile, Bank of England (BOE) Governor Andrew Bailey’s weekend comments also undermine the sentiment around the pound. “I don’t think it’s our job to steer markets day by day and week by week,” Bailey told Bloomberg TV.
Next of relevance for the major remains the speeches by the Fed and BOE central banks’ Chiefs, scheduled later on Monday.
Looking at GBP/USD’s daily chart, the bears are looking to test the rising trendline support at 1.3427 after the recovery faltered near 1.3500.
A daily closing below the support line could fuel a fresh drop towards the 1.3411 September lows. Further south, the 1.3400 round number could be threatened.
The 14-day Relative Strength Index (RSI) is edging lower below the midline, keeping the bearish potential intact.
GBP/USD: Daily chart
On the upside, the recovery needs to find acceptance above 1.3500 to take on the previous support now resistance at 1.3559.
The next significant resistance awaits at the 1.3600 psychological mark, which was a pivotal support a week ago.
GBP/USD: Additional levels to consider
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
