Yesterday`s fall in the GBP/USD exchange rate was one of the biggest in August. The last time the pound was falling so fast against the US dollar was in the first half of this month. The GBP/USD has fallen to its lowest level since August 22, remaining in the main downward channel.
The worse condition of the British currency seems to be again due to the increase in chances for Brexit without a deal. British Prime Minister Boris Johnson said he would ask the Queen to suspend parliament so that MPs would not interrupt Britain from leaving the European Union. This raised nervousness in the British pound market and could lead to a decline in GBP. Another political risk could, on the other hand, increase the attractiveness of the US dollar, which was strengthening throughout the whole market.
Finally, Queen Elizabeth II approved the prime minister's request and approved the suspension of the UK parliament almost five weeks before the scheduled brexit on October 31. Therefore, it is worth preparing again for possible higher volatility of the GBP/USD exchange rate, which is also indicated by the currency options market. Volatility for 3-month options on GBP/USD increased to the highest level since January 3.
GBP/USD daily chart. Conotoxia trading platform.
The GBP/USD is still in a downward trend, as its upper limit has been defended in recent days. Thus, only the break of the line drawn through the tops could change the sentiment on this market. The closest support is set by the last low and by the lower limit in the downward channel.
Daniel Kostecki, Chief Analyst of Conotoxia Ltd., a company from the group to which Cinkciarz.pl Sp. z o.o. belongs.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal Opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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