GBP/USD: The pair sinks as post-Brexit negotiations worry, 1.30 is a key pivot level

The GBP/USD pair has fallen very sharply since Monday, marking a yearly low of 1.2940 on Tuesday morning, after the pair closed last week at the psychological low of 1.32. The pair has been trading in a very volatile range since the early on Monday.

After several statements from Mike Barnier, the EU's post-Brexit UK trade negotiator and Prime Minister Johnson, traders are indeed realising that the UK-EU trade talks that have just started will not be easy.

Against this backdrop, the pair had already dropped below the psychological threshold of 1.30 on Monday, but managed to climb back above this key threshold overnight, only to drop again on Tuesday morning, to the annual lows cited above.

The pair has since managed to regain this level, but at this point it appears that this was the result of market profit taking, and there are no significant technical signals suggesting a possible sustained upward turn.

A return below 1.30 would assert the bearish bias and would put Tueday morning's lows at 1.2940, ahead of the psychological threshold of 1.29, in sight.

On the upside, short-term resistance is found around 1.3025, ahead of 1.3050, and then 1.31.

Lastly, it should be noted that in an analysis note published on Tuesday, UOB bank estimates that a consolidation phase is to be expected for the time being on the GBP/USD:

"The manner in which the British pound has given up its significant gains of late last week came as a surprise. The impulsive downtrend seems likely to continue, but overselling suggests that last month's low of 1.2954 should protect against the downtrend. On the other hand, 1.3066 should be strong enough to cap any intra-day rebound (minor resistance is also found at 1.3036)".

Hourly GBP/USD chart