The Pound slides towards 1.2800 as uncertainty surrounding Brexit grows. Investors are worried that the outcome of the negotiations will be a “no deal” Brexit which means that uncertainty will prevail even after negotiations as Britain will leave the EU with no clear plan on the future relationship between the two sides. What triggered the sell off yesterday was U.K Brexit Secretary Dominic Raab’s stating that there is a risk of a “no deal” due to the EU’s “stern negotiating stance”. For today, investors should not only focus on developments related to Brexit but should also focus on the US GDP data which will have an impact on the US Dollar as the economic growth figure will help in determining whether or not the US Federal Reserve will change their monetary policy plan.
The Pound breaks below the 1.2921 support level and slides towards the 1.2840 support. From a short term perspective, the pair's momentum is strongly bearish as prices trend perfectly below the 13-period moving average. From a long term perspective, the pair's bias is also bearish given that prices are trading below the 50 and 200-period moving averages. As Brexit uncertainty continues, the Pound is projected to continue to drop lower. The next leg lower will be triggered by a break below the 1.2792 support level which will pave the way for a drop towards 1.2730.
Support: 1.2792 1.2730
Resistance: 1.2840 1.2921