GBP/USD analysis: Brexit negotiation begins

19 June 2017, 05:33
Tamas Molnar

GBP/USD Current price: 1.2775

The GBP/USD pair settled at 1.2775 on Friday, barely  up weekly basis amid dollar's retreating on Friday on soft local data. The Sterling recovered some ground on hopes for a softer Brexit after the initial post-election slump, but concerns over what's next for the kingdom finally took their toll on the currency, leaving it directionless during the second half of this past week. Brexit negotiations are set to begin this Monday, and with PM Theresa May positioned weakened after the election, it seems the EU will set it terms. The Union has repeatedly stated that there won't be talks over future trade relationships until the terms of the split are agreed, particularly focusing on UK's financial obligations that can account up to €100bn, something that the UK has considered outrageous in the past. The daily char for the pair indicates that the risk is towards the downside, as the price is being capped by a bearish 20 DMA, while technical indicators hover within negative territory, heading marginally lower with limited strength. In the 4 hours chart, the price is above a bullish 20 SMA, this last providing an immediate dynamic support at 1.2760, whilst technical indicators turned south within neutral territory. The key support for this Monday comes at 1.2705, the level to break to confirm a steeper decline.

Support levels: 1.2760 1.2705 1.2660

Resistance levels: 1.2795 1.2830 1.2870

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