Pressure on the British currency remained on Monday. At the end of the day, the pair lost about 100 points and came close to supporting 1.29. Aggressive sell-offs in the pound are driven by the growing risk of a “hard” Brexit. Recall that the British Parliament last Friday voted to approve the agreement with the EU, so the UK will be able to complete the process of leaving the EU by the end of January 2020. At the same time, British Prime Minister Boris Johnson is trying to limit the duration of the transition period (until December 2020), which may not be enough to work out all the mechanisms of cooperation with the European Union. Market participants fear that in such a scenario Britain will not be able to maintain access to the single European market. Pressure on the pound is also exerted by the growth of the US dollar, which continues to enjoy support from strong macroeconomic statistics. The day before, a report on the dynamics of sales of new homes in the United States was released. According to published data in November, the index increased by 1.3% m/m after a decline of 2.7% m/m last month. Analysts expected the negative dynamics to remain at -0.3% m/m. It is worth noting that good statistics from the U.S. not only signals the recovery of the U.S. economy, but also reduces the likelihood of a resumption of the Fed’s rate cuts in the near future. With that said, the sell-off in the GBPUSD pair may continue with the next target at 1.28.
GBPUSD SellLimit 1.2950 TP 1.2810 SL 1.2590
Artem Deev, Head of Analytical Department aMarkets
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