GBP/USD under pressure amid Brexit woes. Gold looks to Fed Chair Powell.

GBP/USD under pressure amid Brexit woes

GBP/USD fell 1.4% last week after the BoE unexpectedly left interest rates unchanged and after the Fed started tapering bond purchases. US NFP also beat forecasts adding 531k jobs and an upward revision to September’s print.

Brexit woes are dragging on the Pound at the start of the week. Relations have deteriorated and talks have failed to resolve problems stemming from the Northern Ireland border. The UK is considering triggering Article 16 which would halt co-operation surrounding the Northern Irish border, potentially in the coming weeks.

Separately Fed Chair Powell is due to speak later.

Where next for GBP/USD?

GBP/USD (FXB) recovered from the monthly low reached on Friday, rebounding towards 1.35 pulling the pair out of oversold territory on the 4-hour chart.

The price trades below its 50 & 200 sma and the 50 sma is crossing below the 200 sma in a death cross bearish signal.

The RSI is firmly below 50 suggesting more downside could be on the cards.

Bears will look to move below 1.3424 last week’s low to test 1.2411 the yearly low and 1.34 round number.

On the upside, buyers will be looking for a move above 1.35, Friday’s high and 1.3570 October 12 low.

Gold looks to Fed Powell

Gold rallied 1.9% last week, the week that the Fed tapered bond purchases and pushed back on interest rate hikes and the BoE also kept interest rates unchanged.

The US NFP beat forecasts adding 531k jobs in October.

Attention is now firmly on Fed speak as Fed Chair Powell is due to speak along with Vice Chair Richard Clarida. Further comments that inflation is transitory, and the Fed is patient on rate hikes could lift Gold further.

Where next for Gold?

Gold (GLD) broke above resistance at 1813 the October high and looks towards 1825-34. A golden cross as the 20 sma crosses above the 50 sma on the daily chart, in addition to the bullish RSI are keeping buyers hopeful of further gains.

Meanwhile support can be seen at the familiar level of 1790 the 20 sma and 1781 the 50 sma. It would take a move below here to negate the near-term uptrend. Sellers could gain traction below 1759.