The British Pound gaps lower as the trading week starts on news that Brexit negotiators failed to reach a deal during the weekend. News outlets are reporting that the UK and the EU were not able to conclude the weekend negotiations with a deal as several disputes and disagreements are still in place, with the most significant one being the Irish “backstop”. The backstop is an agreement that will protect the open border on the island of Ireland. The Pound is trading on a bearish bias as investors fear these unresolved issues will lead to a “no deal” Brexit which raises uncertainty regarding the future of the British economy. For today, investors need to also keep an eye on the U.S Retail Sales figures as they will have an impact on the pair from the greenback’s side.
The Pound was able to break below the 50-period moving average as it gaped lower. Additionally, the pair has recently retested the 50-period moving average on the way up but failed to break above it. This confirms the bearish momentum that the currency is experiencing at the moment. The pair will continue to trend lower as long as sentiment remains bearish surrounding the Brexit negotiations. The next key level to monitor is the 1.3062 support level which also coincides with the 200-period moving average.
Support: 1.3062 1.2953
Resistance: 1.3130 1.3191