British Pound Talking Points:
- Last week’s breakout in the British Pound[1] continues to soften as worries of a No-Deal Brexit have come back into the equation.
- GBP/USD[2] has moved down to a key support level which has so far helped to hold the lows.
GBP/USD Breakout Snaps Back
The bullish breakout in the British Pound is on its back foot as No-Deal Brexit fears have come back into the equation. Our own Martin Essex discussed this earlier this morning as UK Prime Minister Boris Johnson was set to amend the bill to withdraw the UK from the EU[3]. This had a negative effect on the currency as the GBP/USD[4] breakout snapped back to a key area of support around 1.3187, just a few trading days after the currency cauterized resistance at the 1.3500 psychological level.
The big question at this point is whether the bullish trend is over or just taking a break; and from the technical backdrop and given the size of the breakout, the topside of GBPUSD would likely remain as attractive unless or until the current sell-off worsens. The price of 1.3187 remains as interesting and this was looked at last Friday[5], just after the post-Election breakout took place. This is the 23.6% Fibonacci retracement[6] of the 2014-2016 major move in GBP/USD, and this provided a bit of resistance to that bullish price action[7] when the trend was moving-higher ahead of last Thursday’s elections. Also of interest on the long side is the fact that just below that level, at 1.3168, is the 50% marker of the recent bullish move, which also points to topside continuation potential should this zone of support hold.
