GBP/USD Forecast: hard Brexit pushing Pound to new record lows
The Sterling Pound keeps sliding, down to a fresh multi-decade low of 1.2756 against the greenback, following UK PMI, Theresa May, weekend announcements, hinting that the kingdom is getting ready for a "hard Brexit," to be started late March 2017. The FTSE 100 trades at its highest for the year above 7,000, while the American dollar is benefiting from the sentiment, higher against most of its major rivals.
The UK released its September construction PMI, much better-than-expected and back into expansionary territory, resulting for the month in 52.3 against previous 49.2 and expectations of a 49.0 read, but the news was not enough to revert the negative tone of the GBP.
The pair bounced modestly from the mentioned low, but the uncertainty over the result of the Brexit weighs more, keeping the bearish trend firm in place
According to the 4 hours chart, the pair is extremely oversold, as the price is well below a bearish 20 SMA, while technical indicators head lower within extreme levels, with the RSI indicator currently around 22. Nevertheless, there is no technical sign suggesting downward exhaustion, or an upward correction ahead, which means that the pair can extend its decline on a break below the mentioned low, down to 1.2700, with further slides targeting 1.2660.
The 1.2800 level is the immediate resistance, where selling interest will probably surge on spikes. A firmer recovery above the level can see the pair correcting up to 1.2880, although chances are limited and selling interest will be stronger at higher levels.
Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
