GBP/USD struggles around a week’s low as EU-UK leaders jostle for soft/delayed Brexit

GBP/USD traders near 1.3130 ahead of London open on Wednesday.
Brexit uncertainty and traders’ preference for the USD dragged the pair to a week’s low.
Sustained trading beneath 1.3185 signals the pair’s weakness.

Anil Panchal FXStreet

GBP/USD maintained its spot among sellers’ latest favorite around 1.3130 while heading towards the European open on Wednesday. The pair dropped to the low near 1.3120 after Reuters reported no conclusion reached out of the EU-UK leaders’ recent meet. Elsewhere, The Guardian came out with a news report quoting conservative leader that the parliament will take over PM May’s Brexit rights if she fails to get her plan through during the second vote on March 12. Traders may keep observing Brexit updates while giving equal importance to the US data and US-China trade developments to forecast near-term GBP/USD moves.

The GBP/USD pair fall short of pleasing buyers even after registering better than forecast UK Services PMI (51.3 versus 49.9 expected) due to upbeat prints of the US ISM non-manufacturing PMI (59.7 against 57.3 consensus) and New Home Sales (0.621M from 0.6000M forecast) on Tuesday.

Sellers regained control during early Wednesday after Reuters reported that the meeting between Britain’s Attorney General Geoffrey Cox, Brexit Secretary Stephen Barclay and the European Union (EU’s) Brexit negotiator Michel Barnier failed to deliver any conclusion and were stretched to another meeting on Wednesday in Brussels.

Adding to the Brexit uncertainty was The Guardian’s report mentioning that the chief whip of Britain’s conservative party, Julian Smith, warned cabinet ministers of parliament taking the control over Brexit if members of parliament (MPs) reject PM Theresa May’s deal a second time on March 12.

While looming concerns over the UK’s departure from the EU continued hurting GBP, the US Dollar held buyers’ preference as not only latest data but pessimism surrounding rest of the major economies like Australia and Eurozone also pushed traders toward the greenback. Also, positive news from the US-China trade discussion spreads optimism among the USD bulls.

The results of the EU-UK leaders’ meet in Brussels could act as a frontline catalyst for the pair whereas trade updates and the US ADP employment change (expected 189K against 213K) could further validate the moves.

GBP/USD Technical Analysis

GBP/USD’s sustained beneath 1.3185 signal brighter chances of its further declines to 1.3110 and 1.3060 whereas 200-day simple moving average (SMA) at 1.2990 may please bears afterward.

On the upside, break of 1.3185 could open the door for the pair’s rise to 1.3250 and February month high near 1.3350.

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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