GBP/USD Continuous Pressure on the Pound

Following the previous report on GBP/USD, the pair breaks below its 18EMA, with next support zone targeted at psychological level 1.3000 and its 50EMA. Previous evening start formation just below previous resistance zone from March 2019 probably give market participants more of a reason to sell, causing the pair now to trade between resistance level 1.3180 and support level 1.3000.   

In terms of MACD, the stubbornness of bearish momentum continues to to prove the lack of catalyst and bullish strength to allow the pair to continue its rally back above the resistance zone 1.3300. Current price action would be expected to consolidate in between both EMA, until a breakout above previous resistance at 1.3180 or below the support at 1.3000 gives confirmation of the pair’s movement.    

From the fundamental point of view, recent bearish pressure was due to latest dovish speech by Bank of England (BoE) Governor, Mark Carney on Thursday. According to Carney, BoE is ready to adjust their monetary policy in the events of persistent weakness in the country’s economy. BoE was reported to have 250 basis point (2.5%) of policy space adjustments, where Quantitative Easing (QE) and rate cuts are all part of the policy tools.

Adding together with Brexit uncertainties, confidence towards the pound drastically fell, as investors fear that the country will not have sufficient time to reach a trade deal with the European Union, triggering a hard-Brexit after UK PM Boris Johnson ruled out any form of extension during the transition period. 

However, market participants are still looking forward to the official Brexit date on January 31, while today’s movement for the pair would be triggered by US Non-Farm Payroll data.