GBP/USD extends its sharp falls, dipping under the 1.35 price level at one point as data continued disappointing the market.
The collapse of Pound/dollar has been aggravated by the US dollar’s appreciation lately. 1.4376 is the new post- Brexit high and looms above. 1.4345 is the January 2018 swing high that is worth watching. On the contrary, 1.33 works at a significant line of support. These are lines dating back to 2017. The collapse of Pound/dollar has been aggravated by the US dollar’s appreciation lately. It is suggested to buy on support line which is 1.33.
The major market-movers and an updated technical analysis for GBP/USD are given below.
Sterling has been suffering from poor data and political uncertainty. The major reason for the depreciation is the recent downturn in economic data. There is a drastic drop off in productivity for the first quarter of 2018 attributed to the unexpected poor weather that United Kingdom has been facing in the first quarter of 2018. Couple the drop of inflation to 2.5% and unexpected poor growth figure have significantly caused the depreciation in Sterling.
UK has struck a deal with the European Union to the Brexit Transition period. The transition period will last for 21 months which starts from 29 March 2019(Official Brexit day) to 31 December 2020. Investors remain skeptical about appreciation of sterling in short-term because of current political uncertainty.
A slowing economy and political uncertainty has induced me bearish on GBP/USD