- GBP drops hard on the letter of no confidence in PM May.
- does this attract buyers down here ahead of a busy week?
GBP/USD opened in Sydney in a bearish gap on the back of the weekend news article from The Times that was reporting on 40 members of the PM's Conservative party signing a letter of no confidence in Theresa May's leadership.
GBP/USD closed at 1.3197 and opened 1.3158 and has made a low of the same level. However, as a knee-jerk reaction and opening gap, there is a tendency to pick up the opening offers and more often than not, the gap is filled.
A busy week ahead for GBP/USD
Sterling has a number positives as a backdrop in respect to the recent run of improved data and higher rates, but the market is not happy with this news and it really brings the whole Brexit and make-shift conservative party worries to the forefront and caution around bids ahead of a very busy week for cable could leave bulls on the sidelines at the start of the week. We have CPI, PPI, labour market data and retail sales all coming up in the week along with BOE's Haldane, Broadbent, Cunliffe and Gov. Carney are all speaking throughout the week as well.
We had a recent rejection from the October high and the 50% retracement at 1.3338/43 level that is required daily closes above to alleviate the bearish bias that was put in place since the same drop.
On the flip-side,1.3180 has been broken on this gap which now opens the 1.3027 level as the recent one month low. Further below lies that 1.2995 level and the 2016-2017 uptrend line that guards the 200-DMA at 1.2854, ahead of 1.2830 as a 38.2% retracement before the 1.2575 as a 50% retracement.
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