GBP/USD Daily Forecast – British Pound Falls On Brexit Worries

GBP/USD Video 08.09.20.

British Pound Remains Under Pressure As Risks Of Hard Brexit Increase

GBP/USD is declining towards the nearest support at 1.3110 as fears of hard Brexit continue to put pressure on the British pound.

A Financial Times report suggested that the British government had plans to eliminate some parts of the Brexit Withdrawal Agreement, including parts related to Northern Ireland customs.

EU responded to the report and stated that it trusted the British government to implement the Withdrawal Agreement.

Previously, UK Prime Minister Boris Johnson set a deadline of October 15 to get the Brexit deal done. In case UK and EU fail to reach consensus by October 15, UK will leave EU without a deal.

Most analysts believe that this scenario will lead to material damage to UK economy which is trying to recover from the blow dealt by the coronavirus pandemic.

The risks of a no-deal Brexit increase day by day so traders reduce their long bets on the British pound, putting pressure on GBP/USD.

There are no important economic reports scheduled to be released today in the U.S. and UK so GBP/USD trading dynamics will mostly depend on Brexit-related news flow.

Technical Analysis

GBP/USD declined below the 20 EMA at 1.3205 and gained additional downside momentum.

The nearest support for GBP/USD is located at 1.3110. In case GBP/USD manages to settle below this level, it will head towards the next support level at the 50 EMA at 1.3045.

Most likely, the support at the 50 EMA level will be strong. If GBP/USD moves below the 50 EMA, it will gain additional downside momentum and head towards August lows at 1.2980.

On the upside, the previous support at the 20 EMA at 1.3205 will serve as the first resistance level for GBP/USD. In case GBP/USD manages to settle below the 20 EMA, it will move towards the next resistance level at 1.3270.

At this point, GBP/USD lost its previous upside momentum as it declined below the 20 EMA. If GBP/USD fails to return above the 20 EMA in the next few trading sessions, the risks of additional downside will increase.

For a look at all of today’s economic events, check out our economic calendar.