Cable falls to fresh four-month lows as pound stays weak on Brexit jitters

Technical Analysis

Author: Justin Low | gbpusd

Cable falls to 1.2770, lowest level since 15 January

GBP/USD D1 17-05
A horrible week for the pound is just getting worse as cable now falls to its weakest level in four months, breaking below key daily support around 1.2786 and the February low of 1.2771. Further support is now seen closer to 1.2725 before bids and the swing region around 1.2700 will help provide buyers with a key area to lean on.

There are two crucial things happening right now in the Brexit saga. The first being that cross-party talks are over, without coming to a compromise. That is surely to no one's surprise but it just goes to show that lawmakers are basically at a loss as to how to resolve the current Brexit impasse over the past few months.

The second is that May has set out a timeline for her departure, which is almost certainly going to be by the end of June regardless of how the withdrawal agreement bill vote goes in three weeks' time.

ITV's Robert Peston notes that May could still yet throw a curveball and call for indicative votes in parliament next week to try and shift the blame around. But ultimately, I don't see how that is going to help resolve the quagmire we're experiencing right now.

Looking ahead, there's much political uncertainty to deal with as we navigate through the situation at hand. The outcome at the end of the day could still work out in favour of the pound i.e. no Brexit but as it stands, markets will have to still consider the probability of a no-deal Brexit given the way things are progressing now.

That should continue to keep the pound pressured over the coming sessions as a result.

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