GBP/USD: Recovery capped by 1.3800 ahead of May’s Brexit speech
- Buoyed by persistent DXY on dovish Powell’s comments.
- UK PM Theresa May’s post-Brexit plan in focus.
- UK construction PMI rebounds from 4-month lows.
The GBP/USD pair failed the recovery attempts once again near the 1.3790 region, as markets turned nervous ahead of the UK PM May’s Brexit speech while they digest the latest remarks from the BOE Governor Carney.
GBP/USD awaits fresh Brexit news
The sellers continue to lurk at higher levels, as Brexit jitters returned to the markets in anticipation of the UK PM Theresa May’s speech about Britain's post-Brexit relationship with the European Union (EU) scheduled later on Friday. Markets fret over the prospects of a Hard Brexit, especially after Wednesday’s EU draft outline hinted towards the EU’s tougher stance on the trade deal and Irish border issue.
Meanwhile, persisting risk-off trades, in the wake of intensifying global trade war, with Europe, Australia and China responding to the US’s trade tariffs announcement on steel and aluminum, weigh down negatively on the risk currency, the GBP.
However, the major manages to find some support just ahead of the 1.3750 barrier, as broad-based US softness on the back of slightly dovish Fed Chair Powell’s comments during his testimony before the Senate Banking Committee held yesterday. Also, upbeat UK construction PMI data helps keep the downside cushioned in Cable.
All eyes now remain on May’s Brexit speech for the next direction on the prices.
GBP/USD levels to watch
Slobodan Drvenica, Information & Analysis Manager at Windsor Brokers, noted: “Fresh bearish acceleration through initial supports at 1.3703/1.3698 (daily cloud base / Fibo 50% of 1.3042/1.4344 ascend) could extend towards next targets at 1.3550/40 zone (rising 100SMA / Fibo 61.8%). Bears need a firm break below cracked pivot at 1.3764 (09 Feb low) to complete failure swing pattern on the daily chart and spark fresh extension of pullback from 1.4344 (2018 high, posted on 25 Jan). Res: 1.3787; 1.3847; 1.3900; 1.3918. Sup: 1.3755; 1.3700; 1.3674; 1.3618.”