The British Pound has slumped to an 11 month against the Dollar following comments from UK Secretary of State Liam Fox over the weekend that there is a “60-40 chance” of a no-deal Brexit.
This gloom and doom could compound to Bank of England governor Mark Carney’s warning last week that the odds of a no-deal Brexit are “uncomfortably high”. With the GBPUSD tumbling below the 1.2950 level, the downside momentum could inspire bears to attack the Pound and potentially send the currency below 1.2900.
There are a couple of additional factors that could ensure Sterling remains pressured in the medium-to-longer term. Rapidly diminishing expectations over another UK interest rate increase occurring any time soon following August’s “one and done” rate hike is likely to pressure the Pound, while Brexit-related uncertainty is a risk to punishing the currency further to the downside.
Regarding the technical picture, the GBPUSD remains heavily bearish on the daily charts. There have been consistently lower lows and lower highs while the MACD trades to the downside. Bears remain in control below 1.3000 with 1.2900 and 1.2860 acting as key levels of interest. For bulls to jump back into the game, the GBPUSD needs to trade back above 1.3030.