GBP/USD limited below 1.3200 after pulling back from 1.3245
- GBP/USD retreats below 1.3200 after failure at 1.3245.
- Brexit uncertainty is weighing on GBP demand.
- The pound might extend its downtrend to 1.3000 or below – Commerzbank.
Sterling rebound from 1.3100 lows last week has been rejected at 1.3245 area on early trading on Monday and the pair retreated to 1.3170 before consolidating in a tight range below 1.3200 during the US trading session.
The pound treads water with all eyes on the Brexit
Investors remain wary about long bets on the cable, despite the positive market mood, on concerns about the lack of progress in the Brexit talks. Although the negotiations are still going and hopes of a deal have increased, the postures seem to be still far apart in key issues with only six weeks to the December 31 deadline.
The pound has failed to take advantage from the upbeat market mood triggered by better than expected Chinese industrial production data and the drug-maker Moderna announcing that its COVID-19 vaccine is 94% effective. This is the second vaccine reporting promising test results in less than one week and the equity markets have responded with a positive session that has been largely ignored by the main FX crosses.
In absence of relevant macroeconomic data on the UK macroeconomic calendar, the speeches of BoE officials, Teneyro and Haskel have failed to make any relevant impact on the GBP.
GBP/USD risking a decline to 1.3000 and 1.2920 – Commerzbank
Pound’s current downtrend from 1.3300 might extend to 1.3000 or even lower, says Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank: “GBP/USD last week rallied to and failed at the 78.6% retracement at 1.3310 and is expected to fail shortly. Nearby support is offered by the 55-day moving average at 1.3000 and also by 1.2922 the 5-month uptrend. We would allow for a slide back to here short term.”
Technical levels to watch