GBP/USD suffers 3 Brexit Blows – hovers over low support

17 June 2016, 13:17
Sherif Hasan

The British pound continues suffering and finally broke down below the 1.41 handle. It now faces strong support, and not at the round level.

Here are 3 Brexit-related updates and the levels to watch:

Update: the tables have totally turned with the tragic murder of MP Jo Cox. GBP/USD soars 200 pips on rumors of a suspension of the referendum

  1. Ipsos Mori poll: An opinion poll towards the EU Referendum held on June 14th shows another lean towards the Leave Campaign: 49% against 43%. The previous poll by the same firm could not have been more different: 48% for Remain and 35% for Leave. Yet again, we have a confirmation of the trend.
  2. Survation poll: This one is tighter with 45% Leave and 42% Remain, but once again, it shows a break for Brexit: last time, in late May, it showed 44% for Bremain and 38% for the exits. Note that the number of undecideds is falling. This brings the FT’s Brexit tracker to show a 48% / 43% lead for Leave, a 10% change in less than two weeks.
  3. BOE: The Bank of England made its recent rate decision. Needless to say, the policy was not changed. However, they did provide very stark warnings about the impact of a Brexit: a sharp fall in the pound, recession, etc. This was their strongest wording yet. Can it impact voters towards a vote to remain in the EU? It can also backfire, with wide criticism on the Bank’s political interference. It certainly didn’t help the pound.

GBP/USD currently trades at 1.4096 after having reached 1.4077. The moves are somewhat limited with a lot of hedging going on. 1.4050 is the critical support level after working as a double bottom back in April.

1.40 is the next line of support thanks to its round nature and 1.3940 could be a stepping stone on the way down. Further support awaits at 1.3830, which is the cycle low.

Resistance awaits at 1.4150, followed by 1.4280.

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