GBP/USD outlook: the pound falls to three-year lows ahead of Brexit battle in UK parliament
GBP/USD
Cable broke below psychological 1.20 support in early European trading on Tuesday, as persisting Brexit turmoil maintains negative sentiment and keeps pound under strong pressure.
The pair hit new lowest level since early Oct 2016 and threatens for break below 1.1930 (10 Oct 2016 flash crash low), loss of which would trigger significant bearish acceleration and expose levels last traded in 1985.
All eyes are on UK parliament, as lawmakers will meet today in attempts block no-deal Brexit scenario as PM Johnson called for snap election on 14 Oct.
The opposition is trying to pass the legislation to force the government to stop divorce without deal, with possibilities of further three-month Brexit extension.
Bearish studies on daily chart add to negative outlook on political chaos, as 14-d momentum eventually broke into negative territory and heads south, along with other indicators, but deeply oversold stochastic warns that bears may take a breather before final break below 1.1930 pivot.
Broken 1.20 support and former low at 1.2015 (12 Aug) now revert to initial resistance, followed by session high at 1.2068.
Potential upticks are expected to offer better opportunities to re-enter bearish market, while only break above falling 20DMA (1.2138) would put bears on hold.
Res: 1.2000; 1.2015; 1.2068; 1.2100
Sup: 1.1967; 1.1930; 1.1902; 1.1832
Interested in GBP/USD technicals? Check out the key levels
Author
Slobodan Drvenica
Windsor Brokers
Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.
