GBP/USD caught in a no man’s land as May heads to Brexit negotiation table

Theresa May is due to start Brexit negotiations with the EU today. The odds of a ‘Hard Brexit’ have dropped significantly after the snap elections of June 8 left the Conservatives as the largest party with no majority.

UK business leaders have called for ‘Soft Brexit’ - A deal with the EU that will allow tariff-free trade, “minimal customs formalities” and mutual recognition of the rules and standards to ensure continued mutual access for goods and services.

GBP in the no man’s land

Amid the melee, the GBP/USD finds itself in the no man’s land. The daily chart shows two consecutive Doji candles (on June 14 & 15) and a sideways follow through. The high of 1.2818 (June 14 high) and the low of 1.2690 (June 15 low) have been unchallenged till now.

The sideways follow through to Doji candles clearly suggests indecision in the markets. Traders are not sure whether PM Theresa May will be able to get a good deal for Britain, given that her position has weakened after the recent general elections. Even the hawkish surprise by the Bank of England (BoE) last week failed to provide clear direction to the British Pound.

GBP/USD Technical Levels

The spot traded around 1.2770 levels in Asia. A break below 1.2690 (June 15 low) would open up downside towards 1.2635 (June 9 low). A daily close below the same would expose 1.2554 (falling channel support).

On the higher side, break above the immediate resistance of 1.2818 (June 14 high) would open doors for 1.2841 (50-DMA) and 1.2903 (Apr 18 high).