The Pound is in Freefall – When Will It Stop?
It’s been a rough old time for the British Pound. Since the start of the 2nd week of May it’s been completely freefalling. GBPUSD has dropped over 1000 pips to 1.26390 at the time of writing this. There has been no recovery, no respite, just continued weakness. It seems that nobody loves the Pound.
The move down accelerated early last week as cross party talks to resolve the Brexit situation between the Conservatives and Labour broke down. This uncertainty on where next for Brexit is now taking its toll. Things could get worse before they get better, as we have the upcoming EU elections taking place on Thursday, the results of which should become apparent on Friday.
Polls suggest that Nigel Farage is leading the way with his Brexit party, but what is more worrying is the shift away from the main two parties that usually hold a monopoly on any election. These are uncertain times indeed, and while it remains to be seen whether it’s all for the best in the long run, uncertainty causes worry, and worry spooks the markets.
If the slide continues on cable then it’s not out of the question to see a revisit of the December 2018 lows around 1.2500. See chart below. Any lower than that and it will break down into territory not seen since the Brexit vote in 2016. If I am guessing I would say things would need a shock to go that far again, but stranger things have happened.
Expect some volatile moves in price as we begin to hear results of this EU election. Friday should be a good day for trading, but maybe not for investing!
Pete Southern is an active trader, chartist and writer for market blogs. He is currently technical analysis contributor and admin at this here blog.
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