The UK’s Internal Markets Bill has triggered a cascade of events and comments from policymakers in the EU and UK, all of which have heightened fears of a no-deal Brexit and triggered a flight to safety. The British Pound came under further pressure this Thursday and looks set to complete a 4th successive losing day.
Policymakers around the world have expressed concerns that the proposed Internal Markets Bill would directly violate some articles of the Brexit Withdrawal Agreement and as such, violates international law. This could also set a dangerous precedent for existing and future trade agreements, thus necessitating a flight towards the Swiss Franc this Thursday.
Technical Outlook for GBPCHF
This is a classical playbook between a currency with bearish fundamentals that are producing a risk-averse effect on the market, and another which is a direct beneficiary of the flight to safety that follows risk aversion. The pair has broken below the ascending channel as well as two support levels. It is now on the way to targeting the third support in sequence at 1.16822. A further breakdown of this support brings in 1.15299 as a further support level, with 1.13060 and 1.11006 all remaining relevant to the situation.
On the flip side, a bounce on the 1.16822 support allows for a retest of 1.17964. This price level now acts as a role-reversed resistance. Above this level, additional targets lie at 1.19270 and 1.20902 (where the channel’s trend line meets the horizontal resistance).
However, any rallies may be considered as opportunities to sell, if the present risk averse situation persists. The outcome of the series of meetings to be held today on the UK’s Internal Markets Bill could determine price direction for the pair heading into the weekend.