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Analysts at TD Securities see scope for some consolidation in the GBP/USD pair after the recent dramatic fall. They still hold a sell-on-rallies stance as uncertainty is “too high and the United Kingdom’s darkest days likely still lie ahead of it.”

Key Quotes: 

“On a tactical time frame, we think cable has potential to squeeze back toward 1.1863. That represents the 23.6% Fibonacci retracement level of the downdraft since the 9 March peak. If we do get a move above that, we think it should run out of steam ahead of the 1.2003/1.2128 congestion zone. Given the remarkable scale of the move seen thus far, some consolidation should not come as any great surprise.”

“Naturally under the circumstances, we have more than the usual degree of caution, but we think a sell-onrallies stance is still appropriate. Global uncertainty is simply too high and the UK’s darkest days likely still lie ahead of it.”

“For guidance on potential objectives to cable’s downside, we have to go back to 1985. Unfortunately, only have end-of-day data is widely available, which adds to our level of uncertainty. With that in mind, if Wednesday’s low of 1.1453 does indeed give way, as we expect, the next attractor lower could come in at 1.1305. Below that, and a cluster of supports around 1.11 could come into view.”