GBP/USD Forecast: Psst… the UK is not Greece, Eurogroup!
|The Pound was hit at the weekly opening, gapping lower against most of its major rivals after UK Brexit Minister, David Davis, menaced to quit Brexit talks if the EU don't drop the €100 billion divorce bill. The news came after PM Theresa May said last Friday that "money paid in the past" must be considered when discussing Brexit, and that Brussels owes Britain £8.5 billion, over UK's share in the European Investment Bank and other joint projects.
The UK is prepared to present a tough battle, and clearly, is not Greece. The kind of "weapons" the UK can take out are much tougher and is clear that both parts are ready to be trouble for the other.
The EU Council is having a meeting this Monday, with the UK not in the agenda, so far, although comments regarding the matter could be expected to hit the wires. Also, PM Theresa May is scheduled to participate in a televised interview by BBC around 18:00 GMT, and her comments may trigger some sharp moves in Pound crosses.
The GBP/USD pair pretty much filled the opening gap during the Asian session before resuming its decline, usually a strong directional sign, in this case, bearish. The pair trades at its daily lows in the 1.2960 region, around 80 pips below Friday's close, little relevant when analyzed on a stand-alone basis, but quite significant considering the quietness of other major pairs.
Intraday, the pair is bearish, although momentum is yet to pick up, given that in the 4 hours chart, the price is extending below its 20 SMA, whilst the RSI indicator heads sharply south, entering negative territory. Should the decline extend below 1.2950, the immediate support, the pair has scope to extend its decline down to the 1.2900/10 region, while further slides will point to 1.2830, a major static support.
Approaches to 1.3000 will likely attract short term selling interest, but an advance beyond 1.3010 will put bulls back in the drivers' seat.
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