It looks like the Pound Sterling is going to fall in value this week. What exactly is the causal factor of the situation?
Contradictory reports on the progress of the Brexit negotiations have added to investors' skepticism over this long-running issue.
According to sources from the European Union (EU), an agreement has been reached on the rights of the waters which were previously a barrier to negotiations.
On the other hand, on the UK side, the British government claimed that an agreement had not yet been reached between the two parties. Negotiations will continue this week involving UK Prime Minister Boris Johnson with European Commission President Ursula von der Leyen.
This is seen as a factor supporting the price decline on the GBP / USD pair chart, after the price closed again below the 1.35000 level at the end of the New York session on Friday to end last week's trading.
Last week, the price was seen testing the 1.35000 resistance zone which has been the price resistance since December 2019, but the price dropped again after reaching the latest high level around 1.35400 thus recording the latest high level since May 2018.
However, the opening of the Asian session earlier this week saw the price move below the Moving Average 50 (MA50) barrier level within the 1 hour time frame of the price movement giving more indications for a downward trend.
Until the trade continues to the European session, the price is seen to drop to around 1.34000 testing the RBS zone (resistance become support).
If a lower drop passes the RBS zone, the price is seen to continue further down towards the RBS zone 1.33000.
However, if the price rises again, the resistance zone of 1.35000 will be re-tested this week with the expectation that the latest high level reached on Friday will also pass the price.
