Fears of a second coronavirus wave in the UK combined with the real possibility of a no-deal Brexit and accompanying damage to the economy, are pushing sterling lower, and there is little reason to fight the move.
Prime Minister Boris Johnson announced measures on Tuesday to combat the second coronavirus wave while avoiding a full lockdown nL5N2GJ0YJ as Bank of England Governor Andrew Bailey warned that the second wave reinforced downside risks to the bank's forecasts and said it would do everything it can to support the economy nL5N2GJ1KQ.
Meanwhile Johnson moved a step closer to getting parliamentary approval for new powers to break the Withdrawal Agreement with the EU nL5N2GJ4F1.
Germany's Europe minister called the changes to the agreement "totally unacceptable" nL5N2GJ1QJ and Ireland's foreign minister said, "There is a growing sense that perhaps the United Kingdom does not want a deal" nS8N2G507P.
Technically the GBP/USD setup is bearish with 5, 10, 21 daily moving averages, and momentum studies all tracking south. Support at 1.2721-1.2123, 61.8% of the June-September rise and the 200 DMA, proved resilient on Tuesday, but remains under pressure.
A sustained break looks viable, and would target 1.2542, 76.4% of the June-September rise.
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