GBP/USD: Brexit woes, calls for BOE’s rate cut depress traders around 1.3000
- GBP/USD bears the burden of downbeat data, worries concerning Brexit.
- The UK Chancellor Sajid Javid signaled harsh Brexit, challenges to the businesses.
- A slew of downbeat data favors the BOE’s recently dovish tone.
Following its brief dip beneath 1.3000, to the intra-day low of 1.2994, GBP/USD seesaws near 1.3000 while heading into the London open on Monday. The pair came under pressure on Friday amid increasing odds of the BOE’s rate cut whereas the recent Brexit-negative headlines offered fresh downside to the quote.
Not only the pessimism spread through the comments of the UK’s Finance Minister, Sajid Javid, but news from the UK Express also threatened the Brexit optimists. The headlines relied on the report while saying that the UK PM Boris Johnson will impose restrictions on low-skilled migrants who wish to come to the UK on the first day after the Brexit transition period ends in December. This will increase the hardships of the EU-UK trade talks and increase the odds of a harsh Brexit.
The downbeat prints of the UK Retail Sales, published Friday, pleased the BOE doves ahead of the month-end monetary policy meeting. Earlier in the month, the BOE Governor Mark Carney highlighted fears of Brexit and renewed risks of a rate cut from the British central bank.
On the other hand, the US dollar remains positive after a slew of positive economics pushes the US Federal Reserve to rethink their “wait and watch” approach.
The market’s risk tone remains mostly sluggish amid the absence of US traders and a lack of major data/events on the economic calendar. The same could be witnessed in Asian stocks.
Looking forward, traders will keep eyes on the trade/Brexit headlines for fresh impulse while Tuesday’s headlines employment data from the UK will be the key to watch.
Technical Analysis
A daily closing below an upward sloping trend line since early-November, at 1.2985 now, can fetch the quote further down to 100-day SMA near 1.2800.