GBP/USD skidding along the bottom of the recent sell-off(s), bears eye below 1.20 the figure

• Brexit dramas are here to stay for the pound, but the Fed takes the spotlight today.
• GBP/USD bears eye below 1.20, no signs that the long-term bearish trend could change course.

GBP/USD has consolidated around 1.2150 following a fresh score to the downside in pursuit of a break below the 1.20 handle on hard-Brexit fears as Johnson exclaimed that the current deal is dead and that a no-deal Brexit is "now a very real prospect". The pound initially fell at the start of the week and has accumulated a loss of over 2% since the open this week. It all kicked off when a spokeswoman for Downing Street said that the UK would not enter talks with Europe unless the so-called Irish backstop is scrapped, proclaiming that because the EU has said it is not willing to renegotiate on this point, "we must assume there will be a no-deal Brexit on 31 October."

This came after the Asian open news based on Michael Gove's comments that was reported in the Sunday Times that the government was "working on the assumption" of a no-deal Brexit.  In more recent trade, Steve Barclay MP and Brexit Minister has Tweeted that "Two new Brexit committees are now up and running. I came away confident; we now have a fresh approach to negotiating a deal and are well prepared to leave the EU."  Also, he said, "Spoke to Michel Barnier today and made our position clear: We want a deal but are leaving the EU on October 31 with or without one," in a tweet. 

All eyes back on the Fed

Meanwhile, all eyes are on the Federal Reserve interest rate decision today. "The FOMC policy meeting is universally expected to deliver a cut," analysts at Westpac noted, saying that Westpac expects a 25bps cut and market pricing of 28bps is consistent with that view albeit reflecting a small chance of a 50bps move. "Guidance in Powell’s press conference will be watched closely for any hints of a follow-up move at the Sep 18 meeting."

GBP/USD levels

Valeria Bednarik, the Chief Analyst at FXStreet, explained that GBP/USD remains extremely oversold after falling roughly 400 pips in the last four trading days, yet there are no signs that the long-term bearish trend could change course:

"In the 4 hours chart, the pair remains well below all of its moving averages, with the 20 SMA heading firmly south almost vertically. Technical indicators have recovered from their intraday lows, but lost strength upward within oversold readings, falling short of anticipating a corrective advance."