Date: 10 May 2019
The British pound continued to turn lower against the US Dollar on the foreign exchange market as UK cross-party Brexit talks failed to find a solution to the United Kingdom’s departure from the European Union. Sterling fell to a fresh monthly trading low below the 1.3000 support level, as it became clear that the UK Conservative and Labour party leaders are still far apart over all issues concerning Brexit.
Labour leader Jeremy Corbyn said that the Conservative party had failed to move on its so-called Brexit red lines and that the prospect of an upcoming United Kingdom general election seems to the only solution to fix Brexit. Calls are now growing for British Prime Minister Theresa May to step down, which is adding to the overall uncertainty surrounding the current UK political landscape.
The British pound often suffers during times of political uncertainty and may continue to come under a renewed pressure until a Brexit deal is struck. PM May has repeatedly swept aside calls for her to step down and has recently pushed-back on suggestions that she should set out a time table for her exit date as British Prime Minister.
Sterling faces another key test of sentiment today from the release of United Kingdom GDP data from the first three months of 2019. Today’s GDP release from the first fiscal quarter of 2019 is expected to show that the UK economy grew by 0.5 percent, far outpacing the previous fiscal quarters 0.2 percent growth.
The United Kingdom economy is also expected to have grown by 1.8 percent on a year-on-year comparison basis, beating the 1.4 percent growth seen during the same period last year. The United Kingdom economy has been bettering most economists expectations, despite UK businesses suffering from Brexit uncertainty and a sustained drop in UK household spending and consumer confidence.
GBP/USD Daily Mountain Chart | Source: ActivTrader
The British pound has so far found strong weekly support from the 1.2966 level against the US Dollar, with the 1.2880 and 1.2740 levels now the strongest forms of technical support below. GBP/USD buyers will need to move above price the 1.3100 level to shift the current bearish sentiment towards the pair, with the 1.3175 and 1.3255 levels now acting as extended weekly resistance.
Written by Nathan Batchelor, External Analyst, ActivTrades
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