GBP/USD holds above 1.28, on the brink of biggest weekly drop since January
|The GBP/USD pair fell its lowest level since April 25 at 1.2775 during the NA session and started to retrace its losses as investors started to cash in their profits ahead of the Memorial Day weekend. As of writing, the pair was trading at 1.2805, losing 130 pips, or 1%, on the day.
In addition to the recovery seen in the US Dollar Index on the back of solid data, the cable's broad-based weakness put further pressure on the pair. Other than the greenback, the GBP recorded heavy losses against the euro and the yen as well. On a weekly basis, the GBP/USD pair lost nearly 200 pips and is on its way to record its largest weekly fall since the first week of January while the EUR/GBP pair gained more than 100 pips and the GBP/JPY lost more than 200 pips.
Rising concerns over the ability of UK Prime Minister May's Conservatives to win the election on June 8, which would jeopardize a smooth Brexit process, seems to be the main catalyst behind the GBP's collapse. "Labour continues to narrow the gap on the Conservatives with one YouGov poll putting them within five points of Theresa May's party," said The Telegraph in a recent article.
- UK Election: Labour continues to close the gap against Conservatives
- UK: YouGov/CEBR consumer confidence, weakest since weeks after Brexit vote
Technical levels to consider
With a weekly close below the 23.6% Fibo retracement of the March-May rise at 1.2820, the pair could aim for 1.2690 (Fibo 38.2%) and 1.2590 (100-DMA). On the upside, short-term resistances could be found at 1.2900 (psychological level), 1.2940 (20-DMA) and 1.3000 (psychological level/May 24 high).
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.