GBP/USD Forecast: poised to retest 1.2793, post-Brexit low

Valeria Bednarik FXStreet

The Pound gapped lower at the weekly opening, plunging against the greenback to 1.2845, its lowest since early July, after London opening. During the weekend, Theresa May announced that she will introduce a "Great Repeal Bill" in the next Queen's Speech, which will take place by the end of March 2017, a first step towards the Brexit. She also pledged to "decide for ourselves how we control immigration," adding that the UK "will be free to pass our own laws." Market's understand her statement as a clear sign of a "hard Brexit" the reason behind Pound's sharp decline.

The GBP/USD pair bounced from the mentioned low after the release of the September Markit manufacturing PMI, which came in at 55.4, the highest level in over two years, although the pair remains below 1.2900.

The 4 hours chart presents a strongly bearish technical tone, as the price has accelerated its decline below a strongly bearish 20 SMA, whilst technical indicators maintain sharp bearish slopes near oversold readings. Should the decline extend below the mentioned daily low, the next bearish target is 1.2793, the 31-year low posted after the Brexit vote. Further slides will likely trigger panic selling, with 1.2750 as the next short term target.

If the pair recovers above 1.2910, however, it may correct higher, and close the weekly opening gap, rising up to 1.2960.

View live chart of the GBP/USD

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.

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