Breaking: GBP/USD plunges below 1.19, down over 1,300 in 9 days as severe recession feared

Yohay Elam FXStreet

GBP/USD has been extending its downfall and has dropped below 1.19, falling to levels last seen in October 2016, during a flash crash. At the time of writing, cable has reached a low of 1.0877 with a limited bounce. It traded near 1.32 on March 19, a fall of over 1,300 pips in nine days.

The coronavirus crisis is weighing heavily on markets with forecasts of a severe recession coming. UK Prime Minister Boris Johnson spoke of a "wartime government."

See: Three reasons for the sell-off, with the bottom out of sight

Here is how the crash looks on the daily chart:

The daily chart comes in handy amid the fall. The currency pair is down to the lowest since October 2016, when it suffered a flash crash. The Relative Strength Index is well below 30, indicating extreme oversold conditions, but abnormal conditions mean it could continue lower.

Support awaits at 1.18 and 1.17.

Resistance is at 1.1957, the September 2019 low, and then by 1.20 and 1.2120.

More: GBP/USD: Momentum of the sell-off on Cable continues [Video]

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.

GBP/USD holds above 1.3350 with the 200-day SMA capping gains

The British Pound appreciates against the US Dollar on Tuesday to trim previous losses and return to the 1.3375 area, aiming to retest resistance at the key 200-day Simple Moving Average. This is a popular indicator, which lies a few pips below 1.3400 and has been capping Pound’s recovery over the last two weeks.

EUR/USD holds gains near 1.1400 ahead of US CPI

EUR/USD extends gains and retakes 1.1400 in the European session on Tuesday. The US Dollar sees a profit-taking pullback, supporting the pair's rebound. However, the potential upside for the pair might be limited amid renewed US military strikes against Iran and ahead of the US CPI data and Fed Chair Warsh's testimony.

Gold sticks to gains above $4,000 ahead of US CPI, Fed's Warsh

Gold trims a part of its modest intraday recovery gains and remains within striking distance of a nearly two-week low touched earlier this Tuesday. The commodity, however, sticks to a positive bias above the $4,000 psychological mark through the first half of the European session amid mixed cues.

Major Altcoins: XRP, ADA and SOL remain vulnerable as bearish grip tightens

Major altcoins in the crypto market, such as Ripple, Cardano, and Solana, are trading in the red on Tuesday, extending their 2% to 3% decline from the previous day. The technical outlook for XRP, ADA, and SOL shows a near-term bearish bias, with prices trending below their respective 50-day EMAs.

US CPI data set to show inflation cooled in June due to tumbling fuel prices

The US Bureau of Labor Statistics will publish the June Consumer Price Index data on Tuesday. The report is expected to show a decline in consumer inflation, driven by the easing of crude Oil prices following the ceasefire announcement between the United States and Iran.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.