GBP/USD dropped on the acrimony between the UK and the EU over Brexit. The topic remains left, right and center in the first full week of March. Here are the key events and an updated technical analysis for GBP/USD.
The EU published an explosive draft stating that the UK may be suspended from the Single Market during the transition period, that Ireland will remain in the Customs Union and that the ECJ will continue having power through 2030. UK PM May’s response was swift, saying that no British PM can accept such a deal. The bad blood sent the pound lower. In the US, Trump’s tariffs and potential trade war overshadowed the hawkish stance expressed by Fed Chair Powell, that hinted of four hikes in 2018.
GBP/USD daily graph with resistance and support lines on it. Click to enlarge:
GBP/USD Technical Analysis
Pound/dollar failed to break above 1.40 (mentioned last week) and fell to much lower ground, hitting 1.3710.
Technical lines from top to bottom:
1.4345 is the January 2018 swing high that is worth watching. 1.4280 was a top line in early February and it comes next.
1.4150 capped the pair in mid-February. 1.4070 is next, after serving as a swing high in late February.
It is followed by the round level of 1.40, which is eyed by many. 1.3935 was a pivotal line in the range.
1.3850 was the low point in mid-February. 1.3765 was the low point in early February. 1.3710 was a low point in early March.
1.3620 capped the pair on its way up and then turned into support. 1.3550 was the November peak.
I remain bearish on GBP/USD
Brexit is still an issue even if there is hope for a quick deal. The question of the Irish border cannot be circumvented, no matter what. In addition, the UK economy is struggling.
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