GBP/USD weaker, puts 1.2200 to the test

GBP/USD loses the grip further and approaches 1.2200.
Brexit concerns triggered a sell off in the Sterling.
EU-UK officials expected to resume talks later today.

Pablo Piovano FXStreet

The bearish momentum is now picking up extra pace around the British Pound, motivating GBP/USD to drop further and test the 1.2200 neighbourhood.

GBP/USD in 5-week lows

Cable is accelerating the downside today in response to increasing likeliness of a ‘no deal’ outcome on October 31^st. The pair is down for the second session in a row after a brief consolidative period, navigating the area of new 4-week lows.

In fact, the outlook on the Sterling deteriorated further today after a phone call between PM B.Johnson and Chancellor A.Merkel failed to ignite some fresh optimism on a potential deal. On the opposite, and in the wake of the phone call, a Brexit deal was deemed as ‘essentially impossible’.

However, officials of both countries are expected to resume talks later today in Brussels, although expectations of any progress are (very) thin despite the EU has reiterated their aim for an agreement.

GBP/USD levels to consider

As of writing, the pair is losing 0.72% at 1.2204 and a breakdown of 1.2014 (2019 low Aug.12) would expose 1.1958 (2019 low Sep.3) and finally 1.1904 (October 2016 ‘flash crash’). On the upside, the initial hurdle is located at 1.2370 (21-day SMA) seconded by 1.2416 (100-day SMA) and then 1.2520 (monthly high Sep.20).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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