GBP/USD Forecast: Three big levels to watch after Brexit-related meltdown

GBP/USD has hit 1.2247 – the lowest in two years on fears of a hard Brexit.
PM Boris Johnson has rejected the claim that the government is assuming no-deal.
GBP/USD may challenge levels last seen in late 2016 / early 2017.

Yohay Elam FXStreet

How low can the pound go? The pound's plummet has turned into an avalanche as the new British government has "turbo-charged" its preparations for a no-deal Brexit. Michael Gove, a senior minister, said that a hard Brexit is a very likely prospect and the media has reported that this is the government's working assumption. GBP/USD has hit a low of 1.2247 at the time of writing – last seen in March 2017.

PM Boris Johnson has helped stabilized Sterling by rejecting Gove's claims that the government is now assuming a hard Brexit. He repeated his stance that a no-deal scenario has only a "million-to-one" chance.

However, markets are left unconvinced. It is time to look at lower levels for the pound. The more real a disorderly Brexit becomes, the more the pound can fall.

The next three downside levels for GBP/USD

GBP USD technical analysis July 29 2019 weekly chart

The first of the three considerable levels on the weekly chart is 1.2110, which was the low point in mid-March 2017. After finding some stability cable shot up from there to 1.3000 within a short time.

The next level to watch is 1.1985, which was the low point in February 2017. While the dip was short-lived, GBP/USD remained depressed afterward.

The third and final line is 1.1806. It was recorded in a "flash crash" move back in October 2016, and despite the rapid nature of the crash, it remains the all-time low for GBP/USD.

Looking up, the first broad upside target is 1.2440, which was a double-bottom earlier this year. It is closely followed by 1.2500 (or 0.80 on USD/GBP) which provided support in the spring. Next, we find 1.2780 that diminished hopes of a recovery attempt.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.