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.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.