As Brexit returns back in the headlines, markets are now looking to the British Prime Minister Theresa May to separate from the EU causing GBP/USD to drop below the $1.20 for the first time since the notorious October flash crash.
Now we’ve spoken about a soft vs hard Brexit on the blog before and questioned some market irrationality over the fact that dragging out the Brexit process in what they call a soft Brexit, and is Pound positive.
I can’t help but have huge questions over the extremely bearish nature over a hard Brexit that we know is coming and is still yet to do the damage to the British economy that some were expecting to all but collapse.
There are even headlines from City Index doing the rounds that if Tuesday’s speech from May indicates a hard Brexit, that Cable could fall to $1.10 in a heartbeat.
But sticking to the short term and onto the charts at today’s weekly open:
The daily shows the technical nature confirming why the bears have been in control.
With price now at the flash crash swing low, reaction off this level will be key.
GBP/USD 15 minute
Zooming into an intraday chart, we can see that price opened right on the swing low support level and immediately has been bought back up into the gap.
This is the key level we will be watching to see if price can hold.
Just keep in mind that US banks will be closed in observance of Martin Luther King Day. This of course means the possibility of exaggerated moves thanks to an illiquid market.
Stay safe out there.
This is a guest post originally appeared on Vantage FX. Reposted with permission.