GBP/USD: Testing bids at 1.2250 on Scotland's prospects for another referendum

GBP/USD has been pressured in early Asian trade, declining from levels just below 1.23 at Friday's close to currently test the 1.2250 handle following weekend comments from Scotland's First Minister Nicola Sturgeon, who told BBC TV, she is not in any way bluffing on the prospect of another Scottish independence referendum.

US NFP stimulates the return of sellers

Looking at recent price action in the Sterling, Valeria Bednarik, Chief Analyst at FXStreet notes: "The Pound got a boost from dollar's FOMC-triggered weakness that resulted in the pair advancing up to 1.2432, a 2-week high." However, a decent US NFP report last Friday, which saw upward pressure on wages, saw sellers return, sending the rate back towards 1.2250 before some profit-taking.

Valeria adds: "Concerns about the upcoming Brexit continued to weigh on the UK currency as well, fueled by comments by Jonathan Faull. Faull was  a British official in the European Commission, who retired this January after the failed attempt to keep the UK in the EU. In an interview last Friday, he said that  access to the single market is not "for sale," implicating that the UK will be unable to buy privileged access to the single market after leaving the EU."

GBP/USD technicals

Technically, Bednarik suggests: "The daily chart shows that the price advanced temporarily above a bearish 20 SMA, now around 1.2365, and even beyond the 38.2% retracement of the latest daily decline before sinking. In the same chart, technical indicators have turned south after failing to surpass their mid-lines, maintaining the risk towards the downside. In the shorter term and according to the 4 hours chart, the downside is also favored, with the 20 SMA converging with the 23.6% retracement of the mentioned side around 1.2330, and technical indicators now flat around their mid-lines, after correcting the overbought conditions reached a day before."