09:36, 11 December

Breaks Through Support at 1.27 as Brexit Future Unknown

In the last 24 hours the GBPUSD has fallen sharply to its lowest levels in almost two years as the strong support at 1.27 has given way to immense selling pressure. In the last week the sterling was again enjoying much needed support from this level as it had firmly established as a key support level as the currency pair had enjoyed considerable support from this level on several occasions in the last few months. As has been stated several times in the last few weeks, should the GBPUSD drop through the support at this level, then it could fall considerably further with no obvious support levels nearby.

Around mid-August the GBPUSD also rallied well which saw it regain lost ground from a 15 month low below 1.27, before reversing strongly again at 1.3050. Throughout July the GBPUSD was content to trade in a very small range right around the 1.31 level. It was also feeling some selling pressure from the resistance level at 1.32. The 1.30 level that provided strong support to the GBPUSD and was a key level throughout 2017 seems to have lost its significance as the 1.3050 is more relevant presently.

Throughout most of May the GBPUSD dropped dramatically from the resistance level around 1.43 down to the 1.32 level. The 1.36 level provided some resistance to the sterling in the last nine months or so and providing a little bit of support, except the GBPUSD continued lower through this level. Earlier this year we were looking at the resistance level at 1.43 looming like a dark cloud in the distance ready to strike. Several times this year the resistance around that level stood firm and sellers jumped all over the GBPUSD forcing it down to several lows. Interestingly, despite all the aggressive selling it wasn’t so long ago the GBPUSD hit a two year high above 1.43.

In the latest move confirmed in a statement by Prime Minister Theresa May to lawmakers in the House of Commons on Monday, a Brexit vote in U.K. parliament has been delayed by PM May, following fears that the British government was headed for an embarrassing defeat.“If we went ahead and held the vote tomorrow, the deal would be rejected by a significant margin,” she told parliament of the agreement she clinched after 18 months of tortuous negotiations.With her position in jeopardy, PM May said she would now go back to the European Union and seek reassurances over the so-called Irish “backstop”, which is an insurance policy to ensure no return to a hard border on the island of Ireland."I will hold emergency talks with EU leaders to discuss possible changes to backstop," May said before adding that Brussels were open to further discussions on the matter.The U.K. leader defended her original proposal saying she was in "no doubt that this is the right Brexit deal." May also warned that those who wanted to promote a second referendum, must "be honest on the risk of dividing the U.K."The EU didn’t seem as enthusiastic for more talks as European Council President Donald Tusk said neither the withdrawal agreement nor the Irish backstop would be renegotiated.