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    Sterling Break of Support on Continued Brexit Fears, Inflation Weighing

    The Sterling has been under continued pressure mainly because of Brexit fears. Yesterday we witnessed a tragic event, the terror attacks in Brussels where the Sterling suffered the biggest decline among other major currencies as this will boost the case for campaigners who want to see Britain out of the European Union.

     

    The 'Pro-Brexit' politicians argued that migration leaves Britain vulnerable to attacks, while Prime Minister David Cameron stated that being part of the European Union aids security. The Sterling is already the worst performer against the major currencies in Q1.

    The UK Consumer Price Index data has also applied further pressure to the Sterling. Inflation remained at a year-on-year 0.3% last month. Analysts were forecasting a slight increase to 0.4%. A drop in CPI was contributed from the transport, food and non-alcoholic beverages having put downward pressure on inflation.

    We have seen the GBP/AUD break the support level at 1.9000 and threatens to test the next major support level at 1.7415 which is the 61.8% Fibonacci Retracement level. There is an interim support at 1.8350 but with continued 'Brexit' fears these levels are under threat.

    The GBP/USD daily chart shows us the steam has come out of the rally that we have seen in the Sterling. We have seen it form a lower peak and a move down below 1.4050 then it's a real threat for the GBP/USD to test the 1.3835 lows reached on the 2nd March 2016.

    The only high impact news out of the UK is the Retail sales figures where analysts are forecasting a negative read of -0.7% from a previous read of 2.3%. If the analysts are correct then there will be continued downside pressure for the Sterling.

    File under: brexit, british pound, GBPAUD, GBPUSD, sterling, technical analysis, terror attacks


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