GBP/USD steady above 1.3750 after May’s speech

• Cable unable to benefit from weak USD. 
• GBP among worst performers of the day and week.

The pound remains steady following Theresa May Brexit speech. GBP/USD is about to end the week hovering around 1.3770/80, with a weekly loss of around 200 pips. 

PM May spoke about the future trading relationship between the UK and the European Union. She acknowledged that the future will be different with less access to each other’s market. The pound dropped modestly in the market with cable being unable to move higher on the back of a weak US dollar. 

The risk aversion tone prevailing on equity markets also affected the pound today and also over the week. The move lower in main benchmarks accelerated on Thursday after President Trump announced tariffs on steel and aluminium imports. 

Technical outlook 

From a technical perspective, GBP/USD continues to move with a clear bearish bias but over the last two days, the pound offered a small signal about a potential bottom. After falling to 1.3710, the lowest in a month, the pair rebounded rising above 1.3750. It offered a minor signal of a bounce. Today price was rejected from above 1.3800 showing that a strong recovery is off the cards. 

Cable continues to move within a bearish channel. To the upside, key resistance levels are seen at 1.3920/30 (20-day moving average) and 1.4030 (upper limit of the channel/ downtrend line). A break of the last one, would clear the way for a stronger recovery.