GBPUSD continued to trade lower yesterday as no-deal Brexit concerns continued to weigh down the pound. The currency pair slid to its three-week lows at 1.2903 after opening at 1.2998. By the end of the New York session, GBPUSD had settled at 1.2934.
Brexit Deal Approved
Earlier last week, the British parliament voted in favor of UK Prime Minister’s Boris Johnson’s Brexit deal. This means that the UK will begin its divorce from the European Union on January 31, 2020. Under this deal, Johnson will have until December 31, 2020 to iron out details of Brexit. Now, market participants are worried that there may not be enough time to sort out negotiations and the UK could end up with a no-deal Brexit which could be detrimental for the British economy.
US Data Disappoints
In fact, concerns weighed down the pound so much that the currency lost the most against the dollar despite negative US data. Yesterday, the Census Bureau reported that durable goods declined by 2.0% in November. Expectations were for a 0.2% uptick. Meanwhile, the core reading printed at 0.0% versus the 1.5% consensus.
On the hourly time frame, we can see that a falling trend line has become apparent when you connect the most recent highs on GBPUSD. By drawing the Fibonacci retracement tool from yesterday’s high to its intraday low, we can also see that it has pared some of its losses to the 23.6% Fib level 1.2937. GBPUSD still has some room to move higher with the falling trend line coinciding with the falling trend line and 61.8% Fib level around 1.2980. If there are enough buyers in the market, a bullish close above this level could mean that GBPUSD may retest its December 19 highs at 1.3120.
On the other hand, if sellers dominate today’s trading, GBPUSD could fall to its November lows around 1.2775.