GBP/USD struggles around 10-week low amid hard Brexit fears
- GBP/USD bears catch a breath after a three-day losing streak.
- Fears of hard Brexit increase as the EU member states harden their demands.
- The US dollar’s broad strength, risk-off also weigh on the pair.
GBP/USD seesaws around 1.2900 while heading into the London open on Monday. While broad US dollar strength has been weighing on the pair off-late, expectations of a hard Brexit recently disappointed the Cable traders.
The EU-UK war over fisheries has been the latest indicating that the sides won’t agree over Brexit term while on a negotiating table during the early March. Adding to concerns was the UK Telegraph’s report suggesting that the EU’s negotiation mandate presented to EU ambassadors over the weekend signals that the Brexit talks will fall as early as this April. Upcoming reshuffle of the Tory cabinet on Thursday also adds to the uncertainty surrounding the UK politics and weigh on the British pound (GBP).
On the other hand, the US dollar benefited from all the corners. Be it Friday’s upbeat employment report or the activity numbers before that, not to forget the market’s rush to risk-safety, the greenback managed to cheer it all.
China’s coronavirus is posing a major threat to the trade sentiment off-late. However, efforts from the Beijing, be it via statements or liquidity infusion, coupled with the recent China CPI, offer intermediate risk reset.
As a result, the US 10-year treasury yields remain positive around 1.58% whereas Asian stocks register mild losses by the press time.
Moving on, a light economic calendar can keep traders looking for headlines from China and the UK for fresh impulse. In both cases, a positive surprise could trigger the pair’s pullback, which is less likely considering the strength of the US fundamentals.
Technical Analysis
While a 100-day SMA level of 1.2910 acts as the immediate resistance, GBP/USD prices can’t avoid visiting a 200-day SMA level of 1.2694 unless crossing the late-January top surrounding 1.3210.
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