The British Pound dropped to new yearly lows earlier this morning, as the odds of a no-deal Brexit boosted after the hard-Brexit advocate Boris Johnson recently became the UK’s Prime Minister. Mr Johnson reshuffled the cabinet, upon his arrival, with key characteristic of the newly arrived lawmakers being their preference to leave the EU by October 31, with or without a deal. The EU, however, has less preference for the hard Brexit but shown no readiness to re-open the previous deal, which in turn increases the chances of a disorderly exit. Additionally, the bearish pressure will remain on the Cable as the UK-Iran drama may get bitter as Britain recently deployed few more ships to Bahrain after Iran recently hijacked one of the UK’s ships.
The Pound bulls failed to break above the 1.25 trend line resistance, two days in a row, during last week, as the bears took complete control and broke to new yearly lows. A pullback towards 1.2382 is expected to test the recently broken support before continuing its downward trajectory. The bears are targeting 1.2350 as the first support in sight, while the bulls will attempt to recover some of the losses by taking out 1.2382 and extend the gains towards 1.2425.
Support: 1.2350 / 1.23
Resistance: 1.2382 / 1.2425