GBP/USD Forecast: Five reasons for the pound's plunge, why there is no end in sight

No Time To Die – the title of the new James Bond movie is relevant for Brexit, which tends to come out from the woodwork in the worst moment. Issues related to Britain's exit from the EU have been the latest to hit GBP/USD, joining a long list that is likely to continue pushing the pair lower.

Here are five reasons for the downfall:

1) Higher US yields: It took markets a few days to react, but the Federal Reserve's signal of tapering its bond-buying scheme has triggered a sell-off in bonds. The result is higher returns on American debt, pushing the dollar higher. Moreover, the move also weighs on tech stocks, thus send safe-haven flows to the dollar. The ease in bond yields hardly helped cable, opening the door to further falls. 

2) No fuel today: The British army is on standby to deliver petrol to stations as a shortage of lorry drivers keeps some pumps dry. Calls by the government to avoid panic-stocking have only resulted in the opposite – long lines to fill as much fuel as possible. Transport issues could derail the economy. It will take a few more days to resolve the issue.

3) Brexit: The UK and France are fighting over fish once again. It is unclear how many boats would be given licenses to trawl the English Channel, echoing a similar standoff near Jersey several months ago. While fishing is a minuscule sector, tensions around it contribute to lack of progress around the Northern Irish protocol. It is also essential to note that the lack of lorry drivers is also Brexit-related. Things will likely get worse before improving. 

4) US default? October 18 is the date that the US would hit its debt limit and could potentially miss payments to bondholders. While such a move has little chances, the ongoing row between Democrats and Repbulicans in Congress is worrying markets. Moreover, Demos are suffering infighting on the $3.5 trillion expenditure package pushed by the White House. Last-minute deals are likely, but probably not on Wednesday. 

5) Still not oversold

The Relative Strength Index on the four-hour chart is still above 20, thus outside levels that proved to trigger a bounce in the past. Pound/dollar continues trading below the 50, 100 and 200 Simple Moving Averages and suffers from downside momentum. 

Bears are in control. and the bottom has not been reached. 

The daily low of 1.35 is the first level to watch. It is followed by 1.3430 and 1.330, levels last seen in the winter. 

Some resistance is at 1.3570, a low point from earlier this year, and then by 1.36, the broken double-bottom. Further above, 1.3695 is eyed.