GBP/USD is resuming its falls, and this times the drop sends it to levels that were only seen briefly, during the October 7th flash crash. At the time, cable fell rapidly during the quiet hours of the Asian session. The pair clearly fell under 1.20, but the extent of the plunge depended on the broker. According to the charts available hereby, 1.19 was the trough. The pair rapidly bounced, but never returned to the previous levels.
GBP/USD has reached a low of 1.2037, below the quick dips seen after that event. During the month of October, pound/dollar slipped under 1.21 several times.
The reasons are two-fold. The pound remains on the back foot due to the talk about a looming “Hard Brexit”. In a weekend interview, UK Prime Minister Theresa May favored focusing on immigration control, seemingly willing to compromise on Britain’s access to the single market.
On the US side, the greenback is strengthening ahead of Trump’s highly anticipated press conference. The US dollar is also recovering against other currencies. Markets still expect the new president to introduce fresh fiscal stimulus in his first days in office. As we await the presser, Capitol Hill is holding confirmations. Trump’s candidate for Secretary of State, Rex Tillerson, is grilled by Senators for both parties.
Here is the daily chart. Support awaits at the round level of 1.20. 1.22 is resistance.