The Great British pound (GBP) has finally found a level of support after a week of freefall that saw the currency drop to as low as $1.20 – its lowest level since January 2017.
Concerns over a swift Brexit resolution coupled with a tumbling FTSE 100 has resulted in a lack of optimism in the British markets.
The pound has now bounced at the same point it did in 2017, which was followed by a 20% rally to the upside over the following four months.
However, the uncertainty surrounding the pound in light of Boris Johnson’s appointment as Prime Minister could see it break this level of support in the coming weeks.
The pound has not traded below $1.20 since 1985, when it dropped to as low as $1.07 following a five-year downtrend during Margaret Thatcher’s tumultuous time as Prime Minister.
$GBPUSD bounces by 1% following a drop to its lowest point since January 2017 at 1.20.
It needs to take out the 22EMA on the daily, which has been being used as resistance since May 10.
If 1.20 breaks price could cascade to the 1985 low of 1.07 before potential Dollar parity. pic.twitter.com/bJp75YPS4u
— Oliver Knight (@OKnightCrypto) August 15, 2019
Moving forwards, if the $1.20 level of support fails to hold, the $1.07 level will be the next point to look out for before potential parity with the dollar is reached.
If the pound continues to rally to the upside, the next significant buy signal would be if a daily candle could close above the 22 exponential moving average (EMA), as this has been acting as resistance since May 10.
Great Britain is set to leave the European Union on October 31, although sceptics believe that date may get pushed back to allow time for further negotiations or even a second referendum as uncertainty mounts behind the potential of a no-deal Brexit.
Turmoil in the traditional financial markets could be a positive signal for cryptocurrencies, which could see increased adoption due to their decentralised nature.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.