GBP/USD freefall: The place will it cease?

Cable merchants will bear in mind in the present day for a LONG time.

The UK authorities’s announcement of a “mini” price range slicing taxes and capping power payments has spooked worldwide traders, resulting in a surge in UK gilt yields and driving GBP/USD all the way down to its lowest ranges since 1985.

Whereas we’re nonetheless a good distance from GBP/USD parity, in the present day’s value motion marks a giant step in that route.

Within the near-term, merchants shall be asking when the promoting will cease. After breaking beneath the COVID panic lows, the 1985 low within the 1.0500 space might beckon in due time, however given the deeply oversold studying on the 14-day RSI, we’d anticipate a short-covering bounce earlier than then so long as we don’t see monetary markets implode within the coming week or two. There may be additionally an outdoor likelihood of UK policymakers intervening out there within the coming days to stem the bleeding.

This week’s huge breakdown beneath earlier assist within the 1.1400 space means merchants shall be trying to promote any rallies above 1.1100 or 1.1200 within the coming week, with solely a break again above 1.1400 giving bears pause.

Supply: TradingView, StoneX

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