The GBP/USD fell today below 1.2700, which means that the British pound declined against the US dollar to the lowest level since mid-January. We have not seen such systematic depreciation in this market for many months. The pound is losing today the ninth day in a row.
The total GBP / USD drop already amounted to over 470 pips and perhaps it is not yet the end of the British pound depreciation. Today's decline below 1.27 may be the consequence of disagreement in cross-party talks on the brexit of conservatives with laborers. What's more, with a high degree of probability, the agreement on the parting of the United Kingdom with the European Union proposed by Prime Minister Theresa May at the beginning of June may be rejected by the deputies for the fourth time. In addition, if Theresa May were removed from power because of the inability to carry out the brexit process and the lack of ability to unite parliamentarians in such an important case for the whole nation, Boris Johnson may succeed her. The same one that urged the British to vote for brexit.
It seems that such a change in the prime minister's seat could weigh on the British currency even more, due to the possibility of increasing the chances for the so-called hard brexit. From the GBP / USD and EUR / GBP charts it can be seen that the further weakening space of the pound was opened.
Chart: EUR/GBP, D1. Conotoxia trading platform
The EUR/GBP is climbing up 12 days in a row after creation of double bottom pattern. The textbook target for this pattern may be located at 0.8866. Next resistance is set by the December high. The area of 0.8680 might be treated as the closest support in this market.
Chart: GBP/USD, D1. Conotoxia trading platform
Meanwhile on the daily chart of GBP/USD the lower limit in a downward channel has been broken, which may confirm the strength of supply. In turn, earlier the market has broken the neck line in the potential head and shoulders pattern.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal Opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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