Brexit uncertainty, Turkish contagion fears leave the higher-yielding GBP vulnerable. Attention turns to Tuesday’s UK jobs report amid empty docket today.
The GBP/USD pair extends its consolidative mode into the European session, although remains close to fresh fourteen-month lows at 1.2723, as markets turn risk-averse amid ongoing Turkish currency crisis that weighs negatively on the risk currency, the GBP.
Additionally, the sentiment around the pound continues to remain undermined amid looming Brexit uncertainty, as markets remain wary whether the UK will manage to strike a good Brexit deal before the UK’s official departure from the EU in March next year.
According to ComRes, a leading market and opinion research consultancy, nearly three-quarters of British adults (74%) feel less confident about Britain getting a good Brexit deal compared to after the EU Referendum results in June 2016.
In the day ahead, amid a lack of fresh fundamental drivers, the pair will continue to track the broader market sentiment and USD dynamics for further trading impetus ahead of Tuesday’s UK labor market report.
FXStreet’s Analyst Haresh Menghani notes, “Despite the recent steep decline, the pair is yet to show any signs of bearish exhaustion and remains vulnerable to continue with its downward trajectory. However, highly oversold conditions warrant some near-term consolidation and could be the only factor helping limit deeper losses, at least for the time being. Hence, any further downside seems more likely to pause near the 1.2725-20 region, which is closely followed by the 1.2700 handle.”
“On the flip side, any meaningful recovery attempt now seems to confront fresh supply near a short-term descending trend-channel support break-point, now turned resistance, currently near the 1.2800-1.2810 region. A sustained recovery beyond the mentioned barrier might trigger a near-term short-covering bounce and assist the pair further towards reclaiming the 1.2900 handle,” Haresh adds.