The pound started the new week very badly and it continues to decline, with the GBPUSD pair briefly dropping below the psychological 1.20 threshold today, reaching fresh 3-year lows.
Traders continue to sell sterling after Prime Minister Boris Johnson said he would trigger a general election in October if lawmakers pass legislation later in the day to force a Brexit delay in the event of a no-deal.
MPs are planning to put forward legislation forcing a delay until the end of January if Johnson is unable to reach a deal with the EU by mid-October.
Thus, the pound could remain under selling pressure, due to elevated political uncertainty and the looming Brexit deadline. Some analysts are already predicting 1.10 or even parity over the next months, for the GBPUSD pair, that is.
From the technical analysis perspective, the pair seems heavily oversold, but this fact doesn't need to be enough to stop bears. If the daily candle closes below the 1.20 mark, further selling could occur.
The short-term support seems to be at today's lows at around 1.1960 and if it doesn't hold, the decline could continue, targeting October 16 lows at 1.19.
On the upside, rallies are expected to be sold, with the first stronger resistance located near 1.2080/1.21. Rising above would most likely hit weaker stop-losses, which could push the pound further higher to 1.2140.
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