Brexit could hard, perhaps very hard, according to reports in the British press. While Downing Street might have wanted to keep the Brexit cards close to the chest, the Sunday Times came out with an article saying that PM Theresa May is set to outline a vision for more sovereignty, more immigration control and thus less access to the single market. Reportedly, she wants “full control of borders”, even if this means ending Briain’s participation in the single market.

Worries about hard Brexit weighed on the pound last week, but when May’s speech was announced, some had hoped that she would opt for a “softer Brexit”, lifting the value of £/$.

The piece, that came out on Sunday, triggered a big Sunday Gap in GBP/USD. Cable closed the previous week around 1.22 and started the new week at a low of 1.1992. While this came during the very illiquid hours of trading in New Zealand, the recovery never went too far. At the time of writing, pound/dollar trades at 1.2030, and the high for the day is 1.2054.

These are the lowest levels seen since the October 6th “flash crash” that sent the pound tumbling down below 1.20 for a few seconds, only to bounce back, but yet again, never fully recover.

Here is how this weekend gap looks on the 30-minute chart. Resistance awaits at 1.21, followed by 1.22. Support is perhaps at the flash crash low, somewhere in the 1.18s, but the actual level the pair reached on that event is disputed. In general, we are at levels consistently traded back in 1985.

More:

• GBP: More Downside On Article 50 Activation; Staying Short – Goldman Sachs
• GBP: A ‘Tricky’ Start For 2017: 2 Major Risk Events Ahead – Credit Suisse