GBP/USD Slumps As Brexit Back In Focus & On Stronger DollarSterling was out of favour on Wednesday because the focus turned back to Brexit and therefore the UK’s future relationship with the EU. European Commission President Ursula von der Leyen marked out her red lines, warning the united kingdom to stay closely to EU rules if it wanted to reach a far-reaching trade affect the EU.
A level playing field is what the EU are trying to find . Time will tell whether it's what Boris Johnson is ready to supply . The pound remains struggling as traders doubt whether 1 year are going to be sufficient tine to agree a deal.
Dollar Advances After Strong ADP Data
The US dollar was on the front foot at the beginning of Wednesday boosted by flows into shelter assets. Yet whilst US – Iran tensions eased, and risk sentiment picked up the dollar remained firm thanks partially to strong ADP data.
ADP private payroll report added a whopping 220,000 jobs in December, this was well before expectations of 160,000 jobs and November’s 67,000 jobs created. Despite the impressive data, the dollar is paring gains, as flows towards riskier assets devour .
The British Parliament is predicted to vote through the Brexit Withdrawal Bill tomorrow. No hold ups are expected. As tension continues t ease within the Middle East US dollar investors could turn their attention towards Friday’s NFP.
Levels to observe
Cable is lacking bullish momentum on 4 hrs chart, below the $1.32 handle and below the 50 sma. GBP/USD is testing support at $1.31. A breakthrough here could see the worth test $1.3055 opening the door to $1.30. an opportunity above $1.3212 could bring a more bullish outlook.