GBP / USD bears take control below key trend line

• GBP / USD bears hit the gas and break the trend line support.
• The GBP is under pressure due to Brexit distress and economic growth concerns.

The GBP/USD has come under pressure in the American session, returning the gains after the weekend’s new BoE headlines made at the opening of the week. At the time of writing, GBP / USD is trading at the day’s lows near 1.3584 and has fallen from the 1.3673 high.

There are a number of negative fundamentals at play, from the Brexit troubles to the energy crisis, which equates to a weaker economic environment in the UK. In recent trade, headlines have circulated that David Frost, the Brexit minister, has been accused by the EU of attempting to undermine serious attempts to resolve the Northern Ireland protocol issue, the Irish foreign minister said.

Simon Coveney, Ireland’s foreign minister, said he had spoken with Lord Frost’s counterpart, European Commission Vice President Maroš Šefčovič, on Sunday. They have agreed that there would come a point where “the EU will say: enough, we cannot commit any more”, said the Irish minister.

There is a risk that Britain will implement a measure to suspend the Northern Ireland protocol post-Brexit, likely to result in a trade war that would be detrimental to both parties. This month will be key in this regard.

GBP / USD technical analysis

We have seen a break of the trend line support that would now be expected to act as a counter trend line in subsequent testing. However, momentum is still with the bears and a retest of horizontal resistance could lead to the next bearish momentum to test the old structure by looking to the left.