Today we’d take a detailed look at the GBP/USD currency pair. Over the last few days the pair experienced some volatility as it broke below 1.2800 and went through a correction. The British pound sterling is suffering mainly due to the political tension in the United Kingdom - Theresa May’s failure to establish a majority in the recent parliamentary elections led to a general lack of clarity as to who the next PM would be. This is extremely inconvenient as the UK just began Brexit negotiations with the European Union yesterday. Today we’re also expecting a speech by the governor of the Bank of England, Mark Carney - this event would likely impact the pair. On the other hand, the American dollar rose a little bit after the Federal Reserve’s decision to increase rates last week, upsetting the GBP/USD rates further. Today the US would release its current account report, where investors are predicting a bigger deficit than before, but as usual, we should pay attention because any results that are surprising would make USD pairs volatile. There would also be a speech by Federal Reserve representative Stanley Fischer, which would again increase volatility in all likelihood. Overall, due to the uncertainty in the United Kingdom and the slight boost in the dollar from the past few days, we expect that the pound would continue dropping in value.
On the daily chart we can see that the price cannot overcome the resistance at 1.2800 and remains below it. If it keeps staying below, we might see it drop down to the support at 1.2515. Unless the level of 1.2800 is broken, the GBP/USD pair would remain bearish.
