GBP/USD revisits sub-1.3300 area as UK MPs eye deadline extension

GBP/USD trades near 1.3250 ahead of London open on Thursday.
The pair failed to hold previous gains as investors doubt Brexit progress.
While 1.3380 can limit the pair’s near-term upside, 1.3220 may offer immediate support.

Anil Panchal FXStreet

The British Pound (GBP) declines to 1.3250 versus the US Dollar (USD) while heading towards European session on Thursday. The GBP/USD pair failed to sustain previous-day rally as traders doubt the British lawmakers’ ability to agree on a Brexit plan now that they have already rejected PM May’s proposal ahead of closing the door for no deal Brexit. Investors may concentrate on how the UK members of parliament (MPs) can agree over delaying Article 50 deadline today.

Lesser than forecast growth of the US durable goods orders ex-transportation and producer price index (PPI) gave an initial boost to the British Pound (GBP) versus the US Dollar (USD) on Wednesday. The moves got additional support after the markets welcomed the British MPs rejecting no-deal Brexit.

Though, the sterling couldn’t remain strong for long as comments from the UK PM Theresa May signaled she had fewer options available for a fresh deal, which in turn means less alteration to her recently rejected the proposal. It should also be noted that the EU Commission chief Jean-Claude Juncker had previously said that there are lesser chances of entertaining UK’s renegotiation demand for third time. Adding to pessimism were the doubts about how long the Brexit can be stretched if at all MPs vote for extending Article 50 date from March 29 in today’s voting.

It is much anticipated that PM May could ask for two months of extension from the EU, if today’s vote receives the support and MPs keep rejecting her old plan (with few adjustments making it the third meaningful vote).

Hence, uncertainties prevail about how the UK policymakers can get a deal through in a few weeks or months that they couldn’t do in recent years.

From the US, the recent comments from the secretary of state criticizing China continue to raise doubts on a successful trade deal between the world’s two largest economies and negatively affect the USD.

On the data front, initial jobless claims for the week ending on March 04 and January month new home sales are on cards. Initial jobless claims may rise a bit to 225K from 223K whereas new home sales could remain mostly unchanged around 0.620M versus 0.621M prior.

GBP/USD Technical Analysis

Successful break of 1.3380 becomes pre-requisite for the GBP/USD pair to aim for 1.3450 and 1.3510 resistances.

On the downside, 1.3220, 1.3180 and 10.3150 are likely immediate supports for the pair traders to watch.

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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