GBPUSD – Momentum Slowing but Remains Bearish

The pound has come under some significant pressure on Monday following Theresa May’s speech at the Conservative Party conference, in which she laid out plans to activate article 50 by March next year and begin the formal process of exiting the European Union.

While this won’t come as a surprise to anyone, it has been the catalyst for another bearish move in the pound which has held up quite well as the economy showed some early resilience to the vote. Against the dollar, the pound is now trading back near the lowest levels reached in the aftermath of the vote and those 1.2796 lows look likely to be tested in the coming sessions.

GBPUSD Daily

While I don’t think the sell-off is done, we are seeing some signs of fatigue in the move on the hourly chart which may suggest that before we see this level broken, we may first see some consolidation or even a minor correction.

GBPUSD 1hr

The bears appear to have retaken control in the longer term but in the short-term at least, a retest of 1.2865 – 15 August lows – or 1.2915 may be on the cards. Above here 1.3050 could provide additional resistance.

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Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.