GBP/USD Falls To Flash Crash Levels On Hard Brexit Worries, Ahead Of Trump

GBP/USD is resuming its falls, and this times the drop sends it to levels that were only seen briefly, during the October 7th flash crash. At the time, cable fell rapidly during the quiet hours of the Asian session. The pair clearly fell under 1.20, but the extent of the plunge depended on the broker. According to the charts available hereby, 1.19 was the trough. The pair rapidly bounced, but never returned to the previous levels.

GBP/USD has reached a low of 1.2037, below the quick dips seen after that event. During the month of October, pound/dollar slipped under 1.21 several times.

The reasons are two-fold. The pound remains on the back foot due to the talk about a looming “Hard Brexit”. In a weekend interview, UK Prime Minister Theresa May favored focusing on immigration control, seemingly willing to compromise on Britain’s access to the single market.

On the US side, the greenback is strengthening ahead of Trump’s highly anticipated press conference. The US dollar is also recovering against other currencies. Markets still expect the new president to introduce fresh fiscal stimulus in his first days in office. As we await the presser, Capitol Hill is holding confirmations. Trump’s candidate for Secretary of State, Rex Tillerson, is grilled by Senators for both parties.

Here is the daily chart. Support awaits at the round level of 1.20. 1.22 is resistance.

(Click on image to enlarge)

GBPUSD-January-11-2017-technical-daily-chart.png (990×567)

Disclaimer: Foreign exchange (Forex) trading carries a high level of risk and may not be suitable for all investors. The risk grows as the leverage is higher. Investment objectives, risk appetite and the trader's level of experience should be carefully weighed before entering the Forex market. There is always a possibility of losing some or all of your initial investment / deposit, so you should not invest money which you cannot afford to lose. The high risk that is involved with currency trading must be known to you. Please ask for advice from an independent financial advisor before entering this market. Any comments made on Forex Crunch or on other sites that have received permission to republish the content originating on Forex Crunch reflect the opinions of the individual authors and do not necessarily represent the opinions of any of Forex Crunch's authorized authors. Forex Crunch has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: Omissions and errors may occur. Any news, analysis, opinion, price quote or any other information contained on Forex Crunch and permitted re-published content should be taken as general market commentary. This is by no means investment advice. Forex Crunch will not accept liability for any damage, loss, including without limitation to, any profit or loss, which may either arise directly or indirectly from use of such information. 

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


Leave a comment to automatically be entered into our contest to win a free iPad Pro.