Following yesterday’s sharp drop in GBPUSD, and the overnight slide, we might see some stabilization in the price today. However, the price bias will remain downwards and I suspect traders will see a corrective bounce in price as an opportunity to add to their bearish exposure.
The price trend will remain downwards as long as the price trades below the July 24 high of 1.2526. Drawing Fibonacci levels from the July 24 high to today’s low of 1.2116 suggest that investors might start to resume selling the British pound against the USD between the 1.2300 to 1.2400 levels. In this interval, we find the 50% retracement level of the latest slide at 1.2370, and also the July 17 low of 1.2379, an important level that in the past supported the pair.
If the price indeed turns lower from the projected interval, I will assume that the price will revisit today’s low of 1.2106 followed by a test of the March 2017 low of the psychological level of 1.20
The background to the latest slide in the British Pound is Michael Gove saying that that the government’s working assumption is that the UK will leave without an agreement on October 31. The new PM Boris Johnson has since then tried to dispel the concern saying that he is still looking for a deal.
However, Downing Street said that the PM would not meet with EU leaders to discuss Brexit unless the withdraw treaty was reopened and the backstop scrapped. The PM has also rejected to meet with French President Emmanuel Macron and German Chancellor Angela Merkel. The only meeting scheduled for now between the Johnson, Merkel, and Macron will be a G7 meeting in August.Don’t miss a beat! Follow us on Twitter.