- GBP/USD continues to bear the burden of hard Brexit fears after marking the heaviest declines in 13 months the previous day.
- Talks of Scottish exit from the UK and the British PM’s bold actions keep the cable under pressure.
- Broad USD gains offer additional weakness to the pair, UK CPI in the spotlight.
Having slumped the heaviest in 13 months, GBP/USD remains under pressure around 1.3100 while heading into the London open on Wednesday. The pair fears a hard Brexit while the recent USD strength has added worries for the buyers.
The UK PM Boris Johnson stays on the path as far as his “do or die” for Brexit is concerned. The Tory leader is all set to put forward the bill that will block the European Union (EU) transition beyond 2020. However, the regional leaders are skeptical of agreeing on the deals during the short-time and increase the odds of a no-deal Brexit.
Also supporting the argument is the UK PM Johnson’s latest actions, including a ban to Davos, as well as concerns of Scottish exit from the UK as conveyed by Scotland’s First Minister Nicola Sturgeon via the BBC.
On the other hand, the US Dollar (USD) benefited from the upbeat industrial production and housing market numbers, not to forget welcome comments from the Federal Reserve (Fed) officials. The greenback also took advantage of trade positive statements from the Treasury Secretary Steve Mnuchin and Trade Representative Robert Lighthizer.
Looking forward, the Cable traders will concentrate mainly on the November month inflation data while Fedspeak could offer additional hints. In this regard, TD Securities said, “ We look for CPI to edge a touch lower to 1.4% y/y in November (market 1.5%). Underlying this, we expect core CPI to hold steady at 1.7% y/y (market 1.6%) for the third month in a row. With Black Friday having occurred so late in the month this year, we suspect that the discounting won't have been fully captured.”
Technical Analysis
While October month high near 1.3015 offers immediate support ahead of 1.3000 round-figure, pair’s upside beyond 1.3230 can recall 1.3350 to the chart.
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