GBPUSD has stabilized following yesterday’s 690 pips drop, but the downtrend remains firmly in place. The short-term trend will remain downwards as long as the price trades below yesterday’s high of 1.2135, and if we draw Fibonacci levels from yesterday’s high to low, we can derive the 50% correction level at 1.1784, and the 61.8% Fibonacci level at 1.1866.
I suspect that if the GBPUSD indeed turns higher, traders will try to short-sell the pair between the 50% level at 1.1784 and yesterday’s high at 1.2135. If the price indeed turns lower in the aforementioned interval, I suspect the price might be able to revisit yesterday’s low of 1.1448, followed by the psychological levels of 1.14, 1.13, and 1.12. The next historical level that might offer support is the weekly low of the week of March 18, 1985, at 1.1054.
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The mover lower in the British Pound is due to very strong demand for US Dollars, thus the move lower in the British Pound is not unique to the GBPUSD pair. However, the speculation of a London shutdown and delayed Brexit negotiations is not helping the mood. Earlier today, it was revealed that the Brexit Chief Negotiator, Michel Barnier, has tested positive for Covid19, and this will not help, as the heads of state in the EU and UK are busy dealing with the coronavirus.
If the UK would leave without a trade deal then a lower currency will help UK exports, thus the move lower makes sense, if speculator indeed thinks the UK will leave without a deal by the end of 2020.
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