Wednesday, December 12, 2018

GBP/USD - 12 December 2018


Fundamental Highlights

The British Pound slumps further towards the 1.2500 mark as growing Brexit concerns stir away investors from the British currency. On Monday, Prime Minister Theresa May announced that the Parliament’s vote on the Brexit deal struck with the EU will be postponed until January 21st. Such move occurred as May felt the deal will not pass and she preferred to postpone it and attempt to create a new deal with the EU that will satisfy the UK parliament. Sadly, the European Union ruled out the possibility of renegotiating the terms of the deal. May is clearly facing a difficult task and the continuous disappointment in reaching a constructive solution is driving investors away from the British currency. Adding to the uncertainty within the British political and economic state, some members of the British Parliament are planning to oust Prime Minister May from her position. In addition to the Brexit turmoil, the Sterling is also being pressured by a strengthening US Dollar following a recovery in US Treasury yields with the 10-Year yield rising from 2.85% to 2.89%. For today, the focus will remain on any developments related to Brexit and Theresa May’s governmental position. Pound traders need to also monitor the results of the US CPI figures as they will affect the currency from the US Dollar’s side.

Technical Analysis

The Pound slips towards the 1.2490 support level extending losses for the week. Momentum is clearly bearish with all the three major moving averages pointing downwards. The next leg downwards will be confirmed after a break below the 1.2467 support exposing the next key support level at 1.2380.

Support: 1.2467/ 1.2380
Resistance: 1.2609 / 1.2720

Chart (H4)