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GBP/USD Stalls at 1.2050 as Brexit Concerns and PM Sunak’s Struggle in PMQs Weigh on Recovery

 GBP/USD dropped from an intraday high of 1.3860 to 1.3800 ahead of Thursday's London open due to political and Brexit concerns in the U

Arslan Butt•Thursday, February 23, 2023•2 min read
 [[GBP/USD]] dropped from an intraday high of 1.3860 to 1.3800 ahead of Thursday’s London open due to political and Brexit concerns in the UK. The hawkish Federal Open Market Committee’s (FOMC) Monetary Policy Meeting Minutes, as well as geopolitical issues surrounding the Ukraine-Russia war, could further challenge Cable purchasers. However, it’s worth noting that the latest swings in the quote are limited by the absence of Japanese traders and a light calendar.

During the first PMQs in parliament on Wednesday, UK Prime Minister (PM) Rishi Sunak faced tough questions and learned how complex the Brexit problem is. Opposition Leader Keir Starmer pressed for no changes to the Brexit deal involving the Northern Ireland (NI) protocol, which was just opened for discussion, while Sunak’s PM status was threatened by a fall similar to that of Theresa May’s, and Cable buyers were scrutinized.
In addition to the Brexit issue, the UK government’s negotiations with the nursing union probed GBP/USD buyers. The Royal College of Nursing (RCN) reportedly had “intense talks” with Health Secretary Stephen Barclay, but other unions felt left out, raising the prospect of additional strikes in the UK in the future, according to The Guardian.
Meanwhile, US President Biden’s conflicting comments on the triggered US Dollar fall earlier in the day followed a decline in US inflation expectations, as measured by the St. Louis Federal Reserve’s (FRED) 10-year and 5-year breakeven inflation rates.
Although the FOMC’s Monetary Policy Meeting Minutes revealed that policymakers discussed taking it easy on the rate hike trajectory if necessary, the broad discussion on the need for additional rate hikes, as well as hawkish statements from St. Louis Federal Reserve President James Bullard and Federal Reserve Bank of New York President John Williams, call into question the Fed’s dovish tendency.
On the other hand, US Vice President Joe Biden stated that he believes his Russian counterpart is unwilling to use nuclear weapons by withdrawing from an international treaty. However, the anxieties surrounding the Ukraine-Russia war persist, with the current edition of the West and China exacerbating the situation. Previously, China-Russia connections exacerbated geopolitical issues, as the US vehemently condemned such measures and urged an immediate resolution to safeguard safety.

GBP/USD Technical Outlook

The GBPUSD pair is currently hovering around the EMA50, with downward pressure on it in an attempt to break it, which reinforces expectations of a continuing bearish trend, with the next main target being 1.1940.
The suggested bearish wave is still organized within the bearish channel, and breaking the aforementioned level will likely extend the correctional bearish wave to reach 1.1625 on a near-term basis.
However, it should be noted that breaching 1.2160 will halt the bearish correction and potentially push the price to attempt to regain the main bullish trend.
The expected trading range for today is between 1.1970 support and 1.2140 resistance.
Overall, the expected trend for today is bearish.
ABOUT THE AUTHOR See More
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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