GBP/USD – British Pound Declines Due to Delays in Brexit Talks
Aayush Jindal
Key Highlights
The British Pound came under a lot of pressure due to the UK’s general election result and Conservatives losing majority.
The GBP/USD pair traded sharply lower during the past few days and broke a few important supports such as 1.2900 and 1.2770.
Today in the UK, the Claimant Change for May 2017 will released by the National Statistics, which is forecasted to register 10K, versus the previous 19.4K.
In the US, the Consumer Price Index for May 2017 will be released by the US Bureau of Labor Statistics, which is forecasted to increase by 2% (YoY).
GBPUSD Technical Analysis
The British Pound was under a lot of selling pressure during the past few days and moved below 1.2800 against the US Dollar. More losses are likely in GBP/USD as long as it is below 1.2850.The recent political chaos in the UK caused heavy downsides. After trading as high as 1.2977, the pair stated a downside move. It broke a strong support area near the 100 and 200 simple moving averages at 1.2925 on the 4-hours chart.Sellers also managed to take the pair below a channel support at 1.2920. Later, UK’s election results ignited a sharp downside, taking the pair below 1.2800 towards 1.2635.The pair traded as low as 1.2634 from where a recovery was initiated. On the upside, the broken support at 1.2770 may now act as a crucial resistance. It also coincides with the 38.2% Fib retracement level of the last decline from the 1.2977 high to 1.2634 low.Overall, the pair remains in the bearish zone and may struggle to move past 1.2800 in the near term.
UK Election Results and Brexit
This past week’s election results in the UK ignited moves in GBP/USD. Experts now believe that Conservatives losing majority may delay Brexit talks.The credit rating agency Moody’s recently stated that the results will “complicate and probably delay Brexit negotiations”.It means the British Pound is likely to struggle in the near term and buyers would find it difficult to push the GBP/USD pair back above 1.2800 or 1.2900.
Economic Releases to Watch Today
UK Claimant Count Change May 2017 – Forecast 10K, versus 19.4K previous.
UK ILO Unemployment Rate April 2017 (3M) – Forecast 4.6%, versus 4.6% previous.
US Consumer Price Index May 2017 (MoM) – Forecast 0%, versus +0.2% previous.
US Consumer Price Index May 2017 (YoY) – Forecast +2.0%, versus +2.2% previous.
US Consumer Price Index Ex Food & Energy May 2017 (YoY) – Forecast +1.9%, versus +1.9% previous.
The recent political chaos in the UK caused heavy downsides. After trading as high as 1.2977, the pair stated a downside move. It broke a strong support area near the 100 and 200 simple moving averages at 1.2925 on the 4-hours chart.Sellers also managed to take the pair below a channel support at 1.2920. Later, UK’s election results ignited a sharp downside, taking the pair below 1.2800 towards 1.2635.The pair traded as low as 1.2634 from where a recovery was initiated. On the upside, the broken support at 1.2770 may now act as a crucial resistance. It also coincides with the 38.2% Fib retracement level of the last decline from the 1.2977 high to 1.2634 low.Overall, the pair remains in the bearish zone and may struggle to move past 1.2800 in the near term.