GBP/USD Continuous Pressure From Evening Star

Following the previous report on GBP/USD, the pair further its downward momentum, breaking below the 1.3000 psychological support following the evening star formation below the previous high from May 2019. However, the downside was limited by its 50EMA (red), allowing the pair to rebound slightly while re-testing the 1.3000 level. 

In terms of MACD, momentum is still tilted towards the downside, although recent bearish weakening can be seen alongside a technical rebound by the price action. With a lack of fundamental support, traders will refer to the evening star formation and validity from the 50EMA to gauge the near-term direction for the pair.   

From the fundamental point of view, political uncertainties remain as the major driver for the pound sterling as UK Prime Minister, Boris Johnson, now set his path to negotiate trade agreements with the Eurozone, which would be taken effect after the end of Brexit transition period. A no-deal scenario is still on the table as arguments are surrounding the possibilities for both sides to reach a trade agreement under such limited time. Trade negotiation process includes reaching a deal before June 2020, giving the EU six months to approve everything among the bloc. 

Furthermore, should trade negotiations get off-track and Brexit points towards a hard stance, the Bank of England (BoE) will most likely take precautions by further cutting their rates to support the country’s growth. Further rate cuts paired together with a hard Brexit will pressure the pound in the long-run. All in all, the world will be eyeing on trade negotiations between two sides to pursue Brexit drama further, clearly showing that the movie did not end with the Conservative winning majority.