GBP/USD Forecast: Selling the fact

GBP/USD Current price: 1.3476

• The market’s optimism fades in thin holiday trading.
• A post-Brexit accord needs to be ratified by the UK and the EU parliaments.
• GBP/USD turned bearish in the near-term and is poised to extend its slump.

The GBP/USD pair started the week advancing to reach an intraday high of 1.3575. The American dollar fell on the back of optimism, boosted by news confirming that US President Donald Trump has signed the coronavirus-relief/funding bill. Demand for high-yielding currencies pared mid-European session, with GBP/USD falling sub-1.3500.

The UK and the EU reached a post-Brexit deal on Christmas Eve, which includes details on trade, law enforcement, and dispute settlement, among other things. The UK Parliament will ratify the accord on December 30, according to Prime Minister Boris Johnson. On fisheries, the most controversial issue, both parts agreed on a  five-and-a-half-year transition period, in which EU fishing vessels will still have full access to UK waters, with a 25% cut gradually imposed to its fishing quota. The UK celebrates Boxing Day this Monday, which means local markets remain closed.

GBP/USD short-term technical outlook

The GBP/USD pair is trading at daily lows in the 1.3470 price zone, and the near-term technical picture suggests that the decline may extend during the upcoming hours. In the 4-hour chart, the pair is piercing its 20 SMA, which lost its bullish momentum,  although still above the longer ones. Technical indicators have turned sharply lower, with the RSI already within negative levels. Further declines seem likely on a break below 1.3470, the immediate support level.

Support levels: 1.3470 1.3420 1.3360

Resistance levels: 1.3510 1.3550 1.3595

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