The pound had its time in the sun, but like the weather in the UK, this does not last too long. The bounce did not last too long.
GBP/USD is now trading around 1.2950, the lowest level since July 12th. Here are three reasons for the fall:
- RICS survey: Brexit continues hitting the housing market. First came the property funds, then came actual activity. According to RICS, activity dropped to the lowest since 2008.
- BOE Survey: This once-ignored survey by the Bank of England is gaining traction, as we still await some hard data. While this report released, yesterday, was not a total horror show, the level of uncertainty continues weighing on the pound. The BOE did respond to survey data with its massive stimulus package.
- Dollar bounce-back: The greenback gained on the strong NFP report released on Friday and then we’ve seen some profit taking. This profit taking was also accompanied by the feeling that the Fed will not hurry to raise rates – a win-win situation. Nevertheless, the winds are changing once again and the dollar is now strengthening. The US currency is still the cleanest shirt in the dirty pile.
Further support awaits the pound at the “Leadsom Line” of mid-July. The last line to the downside is 1he 31 year low of 1.2790. On the topside, we find 1.30 and 1.3060.
More: Tough Times’ Ahead For GBP; How Low Can It Go? – BofA Merrill
Here is the chart:
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