The Pound drops towards the 1.3100 level as the EU and Prime Minister May fail to reach any progress during the latest round of Brexit negotiations. Most notably, EU's Michel Barnier made it clear that the union will not accept Britain's proposal related to collecting tariffs from the EU. The rejection of the Customs plan means that it will be a difficult path towards the EU accepting May's Chequers plan. The market has again came to a realization that the path towards Brexit will not be an easy one and the uncertainty will continue to hurt the British Pound. Adding to the Pound's weakness, strength is seen on the greenback's front as U.S treasury yields rise and the market begins pricing in a positive U.S GDP reading for today.
The Sterling falls back towards the 1.3100 level after rejecting the 0.618 Fibonacci retracement. The 0.618 retracement also coincides with a key price action resistance level which made it more difficult for the pair to break above this level. The short term trend has now shifted towards a downtrend as trades push the pound down enough to break the 50-peiord moving average. A break below the 1.30917 support level will pave the way for a drop towards the next support level at 1.30507.
Support: 1.30917 1.30507
Resistance: 1.31622 1.32159