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GBP / USD pair declines on reports that the UK has suspended trade negotiations with the EU

GBP / USD pair is declining today due to the Boris Jhonson press-secretary’s statements about the suspension of trade negotiations with the EU.

 

In particular, he said that the UK does not intend to resume negotiations until the EU changes its approach to this process. To reach an agreement, concessions are needed not only from the UK, but also from the EU. So far, the EU authorities are unwilling to make concessions. Therefore, the negotiation rooms have been suspended. Contact groups will interact at the consultation level.

 

The unexpected decision of the UK significantly reduces the likelihood of a trade agreement between the parties.

 

A Reuters poll shows that traders now estimate the probability of a hard Brexit at 40%. As you can see, the most probable outcome is that the UK and the EU can sign a free trade agreement. The problem is that this Reuters poll does not take into account the latest UK action to suspend negotiations.

 

There are no important events in the economic calendar today. Brexit-related news will have a key impact on the dynamics of the pound sterling.

 

After testing resistance at 1.3030, the currency pair resumed its downward movement. Bears are increasing pressure on support at 1.2920. We are expecting a breakdown of this mark and a decline in quotations to 1.2845.

 

  • Resistance levels: 1.2960, 1.3030, 1.3090;

 

  • Support levels: 1.2920, 1.2845, 1.2800.

 

The main scenario - a breakdown of support at 1.2920 and a decline to 1.2845.

 

An alternative option - a consolidation above 1.2960 and rise to 1.3030.

 

The current fundamental outlook is negative. We consider shorts from 1.2960.

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