Pound slides as Brexit concerns quickly resume – GBPUSD forecast

Intermediate
  • A selloff for the Pound over the past 24-48 hours has accelerated through Tuesday with concerns quickly resurfacing regarding Brexit.
  • The euphoric Sterling rally since last week’s strong general election result for the Conservative party and a large government majority has been erased with worries that a no deal Brexit is still a threat.
  • The no deal risk is not seen now in January 2020 at the next Brexit deadline, but rather for the deadline at the end of 2020 to leave the EU.
  • Prime Minister Boris Johnson has indicated he is still willing to leave the EU with no deal and will not extend the deadline beyond the end of 2020.
  • This is in contrast to the view from within the EU, that the end of 2020 deadline is not practical, just from a perspective of time to negotiate and deliver a trade deal.
  • This renewed uncertainty has pushed GBPUSD (Cable) lower and wiped out all the gains since election day last Thursday 12th December, leaving risks for further Cable losses.

GBPUSD technical analysis: Threat flips lower to key 1.3051 and 1.2983

A Tuesday plunge below the next retracement support level at 1.2228, to reject upside forces from the surge late last Thursday (through 1.3500 too 1.3515), to surrender further supports as low as 1.3107/00, switching the threat lower for Wednesday.

  • We see a downside bias for key 1.3051; break here aims for 1.3000 and critical 1.2983, maybe 1.2930/29.
  • But above 1.3174 opens risk up towards 1.3214 and maybe 1.3264.

Intermediate-term outlook

An early December surge through the key 1.3013 peak signalled an intermediate-term bullish shift.

Upside risks: We see an upside risk for and 1.3515, 1.3618 and 1.4000.

What changes this? Below 1.3051 shifts the intermediate-term outlook back to neutral; through 1.2983 is needed for an intermediate-term bear theme

4 hour GBPUSD Chart

gbpusd chart

Editor in chief

Steve Miley has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Market Chartist, the Editor-in...continued

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