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GBP/USD still flirting with 1.30 – 3 reasons why it

After tumbling down below 1.30 early on Wednesday, cable did managed to recover and climb above 1.30. The high was 1.3046, quite a significant 250+ pip recovery from the lows.

However, the pair is struggling to hold on to the round number, and there are  good reasons to see it resume its falls and reach further 31 year lows. Here are 3 reasons  the fall could continue:

  1. More construction worries: 6 companies announced a  withdrawal freeze, all of them property funds. Another one joined today.  We now hear of significant cuts in salutations coming from Legal and General, CCLA as well as Foreign and Colonial. This shows ongoing pressure on this sector.
  2. Darker forecasts: Mohammed el-Arian talked about GBP/USD reaching parity, especially if the BOE slashes  interest rates. Christine Lagarde, IMF Managing Director  urges the UK to get its act together and provide details about Brexit. The UK Tory party continues its process of choosing a new PM, but  a new PM will be in place only on September 9th according to the current schedule.  Without a new leader, it is hard to see decisions being taken.
  3. Strong NFP?:  According to both the ADP and the ISM Non-Manufacturing PMI, we can expect a positive outcome from the US jobs report. This certainly does not guarantee a good outcome from the US, but the US economy is doing better than the UK one and even an OK result could be enough for the greenback to gain against the very vulnerable British pound.

More: Brexit – all the updates in one place

Here is the chart:

GBPUSD July 7 ready to fall from recovery


Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.