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GBP/USD Forecast: Bearish And About To Challenge December Low At 1.2895

Valeria Bednarik - Chief Analyst at FXStreet

GBP/USD Current Price: 1.2936

  • Concerns about a hard-Brexit exacerbated by Withdrawal Bill passing the Parliament.
  • Irish PM Varadkar indicated that the UK PM is embarking on a “harder Brexit than we anticipated.”
  • GBP/USD bearish and about to challenge December low at 1.2895.

The GBP/USD pair fell to 1.2904, its lowest level since December 2, following UK PM Johnson’s victory on Brexit, after the Withdrawal Agreement Bill, finally got parliamentary support. The news was taken as pound-negative, as PM Johnson seems determined to pull the UK out of the Union at whatever cost, included a hard-Brexit. Fears surged after Johnson made it unlawful for the government to extend the trade talks into 2021.

US President Trump added to the ongoing tensions by warning Johnson not to include climate change in future trade talks with the EU. Meanwhile, Irish PM Varadkar indicated that the Prime Minister is embarking on a “harder Brexit than we anticipated.” The UK macroeconomic calendar will remain empty throughout the week.

GBP/USD Short-Term Technical Outlook

The GBP/USD pair is technically bearish, trading around 1.2930 ahead of the Asian opening. The 4-hour chart shows that the decline accelerated once the pair pierced the 200 SMA, now trading below all of its moving averages and with the 20 SMA heading sharply south. The RSI indicator is flat around 28, while the Momentum indicator recovered just modestly, still well below its mid-line, both reflecting the current bearish pressure.

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