- The GBP/USD is bouncing back after crumbling by more than 1.30% yesterday.
- The pair dropped after risks to a no-deal Brexit rose.
- Boris Johnson will now travel to Brussels to talk with EU leaders about a deal.
The GBP/USD is pointing lower as the market continues to watch the ongoing Brexit crisis. The pair, which dropped by more than 1.30% yesterday, is trading at 1.3350. This price is slightly above yesterday’s low of 1.3227.
Boris Johnson heads to Brussels
The British pound was the worst-performing major currency yesterday after Michel Barnier expressed his frustrations to European leaders. He refused to commit on whether the two sides would ultimately reach a deal. His statement came a few hours after a British newspaper said that Boris Johnson was prepared to walk away.
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In response to all these, Boris Johnson held a phone conversation with Ursula von der Leyen, the EU president. This phone call will be followed by an upcoming trip by Boris Johnson to Brussels where he will continue with the talks. There is still no guarantee that the two sides will ultimately reach a deal.
According to Bloomberg, the two sides have significant differences on fisheries, fair playing field, and the rules to govern the agreement. These differences have remained since the talks began.
Subsequently, the risks of a no-deal Brexit have increased, putting the UK economy in an uncharted territory. For one, according to a government report, a no-deal Brexit would lead to a 2% hit of the British economy. It also said that the situation would lead to more than 300,000 job losses in the next year alone.
Indeed, companies expressed their frustrations about the state of the disagreements yesterday. Some of the companies that complained were in the manufacturing, tobacco, and even law firms. Small businesses like corner shops also complained about higher costs.
For today, there is no scheduled economic data from the UK, which means that forex traders will keep their eye on Brexit crisis.
GBP/USD technical outlook
On the four-hour chart, we see that the GBP/USD price crashed to a low of 1.3231 yesterday. This price was along the important ascending trendline that is shown in black.
Today, the pair has risen to the current level of 1.3355, which is slightly below the standard pivot point. It is also slightly below the 25-day and 15-day exponential moving averages.
At the same time, the average true range (ATR), which is an important measure of volatility has also risen. Therefore, the pair will likely be more volatile today as more information stream-in.