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GBPUSD Vulnerable to Larger Losses as PM May Looks into Brexit Abyss

GBPUSD Vulnerable to Larger Losses as PM May Looks into Brexit Abyss

Justin McQueen, Analyst

GBP Analysis and Talking Points:

  • Brexit Impasse Raises Risk of “No Deal”
  • GBP Shorts Back on the Rise

See our quarterly GBP forecast to learn what will drive prices through mid-year!

Brexit Impasse Raises Risk of “No Deal”

GBP has been rocked by the latest round of negative sentiment surrounding Brexit negotiations. With an increased number of MPs threatening to oppose PM May’s Brexit plans, this has forced the Prime Minister to drop her plan for an emergency cabinet meeting today to approve a Brexit deal. Alongside this, while President Juncker states that he believes an EU/UK agreement is imminent, chances that a deal will be approved by the UK parliament is fading fast. As such, GBP is on the backfoot, having gapped lower at the open and made a firm break below the 1.29 handle with eyes now on 1.28.

GBP Shorts Back on the Rise

As Brexit uncertainty continues to linger and with indications that UK growth may continue to weaken throughout Q4. GBP shorts have increased by $482mln to $4.65bln against the greenback, which is now the highest in a month. This in turn, has contributed to the overall USD long positioning, which increased to the largest level in 3 years at $30bln.

GBPUSD Vulnerable to Larger Losses as PM May Looks into Brexit Abyss

GBPUSD PRICE CHART: Daily Time-Frame (Dec 2017 – Nov 2018)

GBPUSD Vulnerable to Larger Losses as PM May Looks into Brexit Abyss

Chart by IG

Momentum continues to shift lower for the Pound with GBPUSD eyeing a break through 1.28. A breach of this level opens up room for larger losses towards the YTD low at 1.2660.

Additional Brexit Analysis

TRADING RESOURCES:

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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