GBP/USD: Bears eye 1.2100 amid Brexit gloom
- Increased speculations concerning the hard Brexit drag GBP/USD to fresh 28-month lows.
- Markets await trade/political headlines, US data for fresh impulse.
With a heavy rush of signals increasing the odds of a no-deal Brexit, the GBP/USD pair declines to fresh 28-month low as it trades near 1.2160 ahead of the London open on Tuesday.
Be it Finance Minister Sajid Javid or Foreign Secretary Dominic Raab, not to forget other new entrants to the British Cabinet, majority of the UK Ministers are preparing for a no-deal Brexit and pushing the EU to re-open departure talks which the bloc leaders are against of.
The British Prime Minister (PM) Boris Johnson tried overcoming that image while visiting Scotland but the Scottish First Minister Nicola Sturgeon didn’t believe in it. Adding to the hard Brexit speculations were signals from the UK’s Attorney General that early elections do not force the government to ask for a Brexit extension, which in turn enables the Government to leave the bloc without any deal during the election.
The UK PM Johnson is now likely preparing for a war committee that will take charge of the Brexit and developments surrounding the same will be closely followed. Further, investors may also ascertain Mr. Johnson’s claim that the deal with the EU is still likely while keeping an eye over the headlines from the region.
Given the absence of the UK data, markets will emphasize more on the US-China trade talks and the US statistics in addition to observing Brexit-related news. Forecasts suggest that most of the US second-tier data, relating to income, spending, housing, and consumer sentiment, are likely to soften and can keep greenback bears alive. However, pessimism at the UK becomes the tough upside barrier for the Cable.
Technical Analysis
11-month old descending trend-line at 1.2110, followed by 1.2100 round-figure, grabs the Cable bears immediate attention ahead of targeting the 1.2000 psychological magnet. Alternatively, July 17 low around 1.2380 acts as near-term key resistance ahead of highlighting January bottom surrounding 1.2440.