GBP/USD remains under pressure amidst new complications regarding Brexit

Amidst a major victory for the Conservative Party in the UK’s general election on December 12^th, and consequently, the approval of the UK’s Parliament for Prime Minister Boring Johnson’s Withdrawal Agreement Bill, the GBP/USD pair isn’t celebrating as much as some would have thought.

Following the Conservative’s victory, the currency pair had surged to above 1.3500 level. The gain, however, turned out to be unsustainable with Cable currently trading as low as around 1.2950 level.

PM Johnson’s Statement Continues To Weight On GBP/USD

Much of the pressure on GBP/USD is attributable to a recent statement by PM Johnson that the British government has no plans of extending the deadline for the European Union to sign a trade deal. Following the UK’s departure from the EU on January 31^st, 2020, the current deadline for the transition period for both the parties to strike a trade deal is in December 2020.

Irish Taoiseach, Leo Varadkar, commented on PM Johnson’s announcement that such a stern stance is likely to push the country towards a harder Brexit than the voters would have cared for. GBP/USD was seen trading as slow as 1.2904 level on Monday.

As of Tuesday, sources informed that the next round of negotiations with the European Union is likely to take place after January 31^st in London. The event will mark the first for the United Kingdom to appear as an entity separate from that of the EU.  

The events of Brexit have continued to cast a strong impact on the global financial markets for almost three years. Following the general election, it was expected that the clouds of uncertainty will finally start to fade away that’ll manifest in the form of greater stability of GBP/USD in the forex market, however, the recent events indicate that the pair is likely to remain volatile until all processes of the UK’s departure aren’t completed.

Technical Levels To Watch In GBP/USD

The approval from the UK’s Parliament could have had a strong positive impact on Cable if it weren’t evened out by PM Johnson’s statement that birthed new complications that continue to stir uncertainty in the currency market.

According to the technical analysts, breaking below the 1.3000 level, the current short-term trend in GBP/USD is bearish. The experts further added that December’s 1.2859 level marks the near-term support for the currency pair. Breaking below the support, 1.2800 will be the next target in sight. On the upside, 1.3012 marks the first resistance for Cable with 1.3060 posing a rather stronger resistance that is to be broken in order for the trend to shift back to bullish.