GBP/USD plunges below 1.3200 handle, hits fresh multi-decade lows

Haresh Menghani FXStreet

The British Pound remained under intense selling pressure across the board, with the GBP/USD pair now breaking below 1.3200 handle to a fresh multi-decade low level.

In an effort to steady global investor sentiment, UK Chancellor George Osborne reassured that the UK economy was fundamentally strong enough to nullify negative implication of the Brexit and that BOE, Treasury, FCA have contingency plans in place to maintain fiscal stability.

Markets, however, ignored the reassuring statement and continued dumping the British Pound, sending the GBP/USD pair spiraling lower in tandem with a sharp slide in the UK government bond yields.

Moreover, Moody's downgrading the outlook for the Aa1 British government debt from "stable" to "negative" is also seen weighing on the GBP/USD pair.

Meanwhile, markets now look forward to the EU Commission meeting, scheduled to discuss Brexit issue at 13.00 GMT.

Technical levels to watch

A sustained selling pressure below 1.3200 round figure mark now seems to drag the pair even below 1.3000 intermediate psychological mark support, towards testing 100% Fibonacci expansion level support (around 1.2850 region) of June 2015-Feb. 2016 downfall and subsequent retracement.

On the flip side, any attempts of recovery, above Friday's swing lows support turned immediate resistance around 1.3230-50 region is likely to get extended beyond 1.3300 handle, towards 1.3345-50 horizontal resistance. Recovery from lower levels would be from near-term oversold conditions and hence is likely to short-lived, which might get sold into around 1.3430-50 session peak resistance level.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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