GBP/USD: Crucial support breached on Brexit impasse

GBP/USD is looking heavy, having breached key support on Tuesday, courtesy of Brexit delay. 

The currency pair fell below the 50-hour moving average, confirming a bearish reversal on short duration charts. The key MA had consistently reversed pullbacks throughout the rally from 1.22 to 1.30 and may work as stiff resistance henceforth. 

The GBP was offered as Prime Minister Johnson's Brexit bill won parliamentary support, but the government’s timetable of just 3 days debate on the bill was rejected. 

With the parliamentary defeat, the probability of Britain leaving the European Union (EU) before the Oct. 31 deadline has dropped sharply. 

Further, a source in Prime Minister Boris Johnson’s office said on Tuesday that a new election would be the only way to move on from Britain’s Brexit crisis if the European Union agrees to a delay until January. 

The lingering Brexit uncertainty could continue to weigh over the GBP during the European session, more so, as key support of the 50-hour MA has been breached, as noted earlier. Also, the pair is trading well below the 100-hour MA for the first time since Oct. 11.

Also, the American Dollar may draw haven bids due to the risk-off mood in the equities and amid trade uncertainty. The US Department of Commerce (DOC) has proposed antidumping duty (AD) and countervailing duty (CVD) investigations of imports of aluminum wire and cable from China to the US International Trade Commission (ITC).

At press time, GBP/USD is trading just below 1.2850 and the 50- and 100-hour MAs are located at 1.2940 and 1.2905, respectively.