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Dec 11 - 11:55 AM

GBP/USD - COMMENT-Under Brexit Pressure, Sterling Finds Support Ahead Of Fibo

By Paul Spirgel  —  Dec 11 - 10:25 AM

Sterling mounted a bid to recover nL1N2IR0Y3 in early U.S. trade from session lows on Friday, but it was still down 0.6% and derived little support from the flow of Brexit headlines after Prime Minister Boris Johnson said it was very likely that the UK would leave the EU without an agreement nL8N2IR1C8.

Safe-haven flows boosted the dollar as Brexit, the expanding COVID pandemic and congressional foot-dragging over U.S. stimulus encouraged a broad risk exodus.

With the clock ticking toward the Dec.
31
Brexit transition deadline, sterling traders have bid up short-term GBP/USD ATM volatility, and 25-delta risk reversals hinted at further GBP/USD weakness GBPVOL=. EU leaders rejected Johnson's proposal for a Brexit call with German Chancellor Angela Merkel and French President Emmanuel Macron on Monday, EU officials said.

GBP/USD finds support beneath Friday's 1.3135 low at 1.3114, the 50% Fib of the September-December rise from 1.2688 to 1.3540, then the daily cloud top at 1.3079.

A break below the thinning cloud eyes could cause a run toward the 200-day moving average at 1.2753 just above the September trend low at 1.2688.

Should a Brexit deal -- or significant progress toward one -- be reached a rally toward Dec.
4's 1.3540 high is likely.

For more click on FXBUZ


GBP Chart: Click here

Source:
Refinitiv IFR Research/Market Commentary

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