GBP/USD risks a potential drop below 1.3000

Chief FX Strategist at Scotiabank Shaun Osborne believes Cable could slip back below the critical 1.3000 handle in the not-so-far future.

Key Quotes

“Sterling was doing OK on the day until the EU’s head Brexit negotiator Barnier termed discussions with the UK “deadlocked” on the issue of the cost of the “divorce” to the UK and suggested that the risk of a “no deal” outcome – one policy option the UK government is supposedly contemplating – would not be good. Brexit concerns may continue weigh on the GBP near-term as political under-currents in the UK remain volatile. Sterling softness may moderate somewhat later in the session if BoE economist Haldane repeats his hawkish perspective on rate policy, however”.

“Cable looked soft in overnight trade and the selling extended sharply in early North American trade through the upper 1.31 area where the 40-day MA currently resides (1.3180). Price action looks soft on the charts now, with the GBP firmly rejecting gains to the mid-1.32s (assuming a low close on the session today, the daily chart will form a bearish outside range signal), suggesting a test of key weekly support just under 1.30 may follow”.

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