Cable continued plunging on Thursday morning trading session. The pair extended the slump rally that had started on May 3. Until today, the pair have hardly seen north. The GBP/USD pair was approaching the sound 1.2616 resistance levels, last tested on Jan 4.
It’s all about Brexit for the Cable. The rising uncertainties and extended deadlines keep spooking the investors.
Last night, the Leader of the House of Commons, Andrea Leadsom, stepped down from her position. In her resignation note, Andrea mentioned that she no longer fundamentally supports the current Brexit approach. And, passing such a deal that she opposes would make things difficult for her.
Meantime, Tories kept the pressure intact on the UK PM Theresa May. The MPs have started counting days for her resignation. Also, last night, the Tories made continuous calls to May to shred down her latest proposal and leave the office. Boris Johnson buckles-up to become the next UK PM. In the meanwhile, speculations suggested that May might meet the Foreign Secretary Jeremy Hunt soon. Mr. Jeremy is said to be May’s favorite nominee to take her position.
Even if a new PM gets elected, it might take some time for the Leader to get settled. However, since it is high time now, the new Leader must start acting from day 1. Anyways, there remains hardly five months for the new Brexit deadline of Oct 31. Odds for a hard Brexit or softer Brexit stays high.
On the other side of the equation, the Greenback remained green following FOMC minutes. The minutes said that there wouldn’t be any change in the interest rates in the near-term. However, there remain probabilities for a rate cut by the year-end depending on the then scenario.
GBP/USD Influencing Events
The economic calendar remained silent amid lack of GBP-specific events today. However, few crucial US economic indexes will report in the European session. At 12:30 GMT, the Jobless Claims data will come out. The consensus estimates the Continuing Claims to appear around 1.67M and the initial claims to appear near 215K. Furthermore, the market expects the upcoming May Markit Services PMI to grow by 0.2%. However, the market stays bearish stance over the April MoM New Home Sales. Laterwards, few Fed’s significant Executives are scheduled to deliver a speech. The Executives will give their opinions about the last FOMC Minutes.
The 9-days Exponential Moving Averages (EMA) indicated a downtrend for the Cable. The pair was hovering within the lower areas of the 1-hour Chart near 1.2613 levels. Also, the Descending Triangle signals for bearish prospects. The Relative Strength Index (RSI) pointed near 26 levels in the Asian session. This position of the RSI alludes a heavy selling among the investors.
The pair stood in the lower vicinity of the Bollinger Bands (BB). The Cable has touched the lower boundaries of the BB, alluding bear call. If the pair moves further down, then the next support line near 1.2369 levels awaits. The Moving Average Convergence Divergence (MACD) appeared below the pair, signaling heavy selling.
This article was originally posted on FX Empire
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