GBP/USD remains under pressure as Brexit uncertainty intensifies

With the increasing odds of a no-deal Brexit, GBP/USD declines to 1.2210 while heading into Tuesday’s London open.

While receding pessimism surrounding the US-China trade war triggered Monday’s pullback, recent political headlines from the UK keep exerting downside pressure on the pair. Among them, the EU-UK tussle over the £39 billion divorce payment, opposition Labour party’s preparations for a no-confidence vote and the Chief Brexit adviser David Frost’s EU visit, on Wednesday, are in the spotlight.

Also weighing on the sentiment is the UK Prime Minister (PM) Boris Johnson’s refusal to rule out proroguing the Parliaments if it can help exit the EU by October 31. At the same time, the Wall Street Journal cites the PM Johnson as being more optimistic about avoiding no-deal Brexit ever since he returned from the EU.

Risk tone also heavies as mixed headlines concerning the US-China trade relationship join market skepticism after the USD/CNY pair surged to fresh high since February 2008.

Although trade/political headlines will be the key to forecast near-term market direction, a speech from the Bank of England’s (BOE) external monetary policy member Silvana Tenreyro, coupled with second-tier data consumer sentiment and manufacturing data from the US, will also entertain momentum traders.

Technical Analysis

An upward sloping trend-line since August 16, at 1.2200, seems to be the immediate support ahead of 11-day-old support-line, at 1.2100. On the flips side, the latest high surrounding 1.2300 and July 17 low of 1.2382 can keep limiting pair’s short-term advances.