GBP/USD clings to 1.3200 amid Brexit pessimism

Brexit pessimism weighs on GBP/USD as Mueller report, US-China trade talk favor the greenback buyers.
Fed policymakers’ comments would be checked to confirm the recent bearish bias at the US central bank.

Anil Panchal FXStreet

The British Pound (GBP) was trading around 1.3200 versus the US Dollar (USD) ahead of London open on Monday. The GBP/USD pair has been volatile off-late as developments surrounding Brexit confront mixed news out of the US. Lack of data/event highlights the importance of the Fed members’ speeches and second-tier US data, coupled with mounting Brexit anxiety, as near-term catalysts.

Friday’s news that the EU is ready to extend the Brexit deadline off from March 29 pleased the GBP buyers initially but doubts over the PM Theresa May’s future leadership confine the Cable’s gain. Though, Bloomberg reports claiming that Chancellor of the Exchequer Philip Hammond and other cabinet colleagues publicly supported PM May eased some of the pessimism.

PM May will put forward her Brexit proposal third time in the UK parliament on Tuesday in order to gain support and avail deadline extension till May 22. If Mrs. May witnesses another humiliation from the members of the parliament (MPs) Brexit will take place on April 12.

On the other hand, the US Dollar was also struggling amid weaker US fundamentals that led the first spread inversion since 2007 between the 3-month Treasury bills and the 10-year note yields.

Recently, the news that the special counsel Robert Mueller failed to find any strong pieces of evidence that support the claims that Trump’s campaign team and Russia colluded during the 2016 Presidential election. Following that news of the US-China trade negotiations to take place on March 28 in China and on April 03 in the US pleased global trade watchers.

Looking forward, in addition to the British PM May’s struggle to win over parliament support for her Brexit deals, comments from the Presidents of the Federal Reserve Bank of Chicago and Philadelphia, namely Charles Evans and Patrick Harker, will be observed closely in light of recently dovish Fed meeting outcome. Also, the February month release of the US Chicago Fed National Activity Index can gain investors’ attention as well. The activity gauge dropped negative to -0.43 during January.

GBP/USD Technical Analysis

While 50-day simple moving average (SMA) and an ascending support-line since January limit the pair’s declines around 1.3070, the 200-day SMA at 1.2980 also become important support to watch during the quote’s south-run.

Alternatively, 1.3245 and 1.3300 can please buyers ahead of challenging them with 1.3380 and 1.3410 resistance levels.

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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