Same story, different day. Tuesday produced another shocker for the Great British Pound, seeing the biggest drop in GBPUSD since 28th March, leaving the pair at its lowest levels since April 2017!
The positive employment report released at 0930 was, in effect, sabotaged by comments from both Jeremy Hunt and Boris Johnson a few hours earlier. Both candidates are ramping up their no-deal rhetoric, with Johnson appearing particularly unphased by severing ties on the 31st October. Sterling broke through $1.25 short-term support, following which it made easy work of the flash-crash yearly low at $1.2440, by early afternoon the pair had pushed into the $1.23s. Oh dear!
I think we can all agree the pound finds itself in a downward trend. A trend is defined by ‘a general direction in which something tends to move.’ If a currency is expected to continue in one particular direction, applying a strategy of ‘holding off’ a few days, implies it will travel further down its present course. This has been very true of GBPUSD’s $1.32 to $1.24 slide. When a market is in a trend, betting against it and allowing more time will, the majority of the time, produce a worse result. The Brexit process is far from finished – please consider your options if you’re GBP exposed between now and October!
Today’s trading session sees UK and eurozone inflation numbers in the morning followed by Canadian numbers at lunchtime.
Written by Viv Savani. 8:43am, July 17th 2019
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