- GBP took a beating on Friday after PM May’s speech.
- The currency pair created a gravestone doji on the weekly chart, signaling bullish exhaustion.
- Talk of a snap election is ‘for the birds’, Brexit minister said.
The GBP/USD fell more than 200 pips to a low of 1.3055 on Friday after PM Theresa May said the Brexit negotiations have reached a standstill.
The sharp decline ended up creating a gravestone doji on the weekly chart – a candlestick pattern which indicates that last week began with optimism but ended on a pessimistic note. Essentially, the gravestone doji is signaling bullish exhaustion.
The bears may feel emboldened if the pair finds acceptance under the last week’s low of 1.3055, while a move above 1.3277 (last week’s high) would strengthen the bull grip.
That said, Brexit newsflow will likely decide which way the Pound will go. The snap election plans came to light over the weekend, courtesy of Brexit deadlock, however, UK Secretary Dominic Raab has ruled out November snap election.
The British pound may also come under pressure if September CBI industrial trends survey data, scheduled for release at 10:00 GMT, shows a big drop in manufacturing orders.
GBP/USD Technical Levels
Resistance: 1.3098 (Sept. 19 low), 1.3150 (200-day MA), 1.3277 (Fri’s high)
Support: 1.3055 (Fri’s low), 1.30 (psychological support), 1.2979 (50-day MA)
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