The GBP/USD pair fell to 1.3925 levels in Europe; lowest since March 2009. The offered tone is mainly due to the Brexit fears. Investors continue to get scared out of Sterling positions even though we have not had any fresh Brexit related news flow. Moreover, warning shots fired by major ratings agencies on Monday are hurting sterling big time.
Apart from being oversold on technical charts, there is nothing out there that can help sterling.
_20160224100404.png "GBPUSD 15-min chart")
_20160224100339.png "GBPUSD monthly chart")
Double blow for Sterling
The sell-off could continue not only because of Brexit fears, but also due to the risk-off in the equities. The oil driven risk-off and Brexit fears is a sort of double blow for Sterling; more so because both can lead to delay in the BOE rate hike/or may actually force BOE to cut rates. To top it, a strong non-farm payrolls figure in the US next week could push up US rate hike bets and further add to the bearish pressure on Sterling.Apart from being oversold on technical charts, there is nothing out there that can help sterling.
Technicals – Falling channel on 15-min chart, strong support at 1.3924
15-min chart- The 15-min chart shows the pair is flirting with the falling channel support at 1.3921.
- A break lower would open doors for a slide to 1.3840. However, the hourly RSI is oversold, which could trigger a minor technical correction to 1.40 levels.
- Monthly chart shows strong support at 1.3924 (76.4% Fibo expansion of July 2014 high-April 2015 low-June 2015 high).
- Trend line support seen around 1.3955 has been breached for now.
- However, a technical correction could gather pace if the spot bounced off 1.3924 and secures an hourly closing above 1.3955 levels.
- On the other hand, a daily close below 1.3924 would increase the odds of a Brexit related slide to 1.3654 (Mar 2009 low).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.