Technically the gbp/usd is strongly bearish. It is intent on setting new period lows. The price, after having broken down the channel composed by the support ( 1.28 area ) and the resistance ( 1.32 ) has started this very short-term downtrend. In less than five sessions this led him to test the key short/medium term support. This one identified by 23.6% of the Fibonacci retracement and placed in the area around 1.264.
For now there are the conditions to see a rebound of the price. The maximum extension on a very short period is on the static resistance of secondary importance set at 1.277. If it reaches this area it will be necessary to wait to see if the price can extend further. And after re-enter in that side channel previously mentioned above 1.28. If it is only a false upside-down movement that will unload all the “oversold” indicators. After it could retrace its steps and push down further, breaking the key support at 1.264 and proceeding towards the minimum of the “Brexit” referendum to date, at around 1.19.
Basically the scenario that has been set up around the pound is extreme uncertainty. As it is not yet clear to date the plan that will be implemented to exit the European Union and on what date, it is very likely a further postponement. The investors, not having a clear picture of the situation, are liquidating their positions on the British currency from their portfolios. This is in favor of other majors.
Yesterday the prime minister May tried to propose a new deal to the parliament. It was very close to the agreement previously rejected and, therefore, recycled. He had also put forward the hypothesis of a possible “referendum 2”, but he did not obtain the approval from his own parliamentarians. So now the macroeconomic scenario is still in the making and marked by a new decline after a very technical uptrend period.
Technically the gbp/usd is strongly bearish. So we recommend a long entry with the first TP in the 1,269 area. The second target on 1,273 and third at 1,277. The SL will be set below the key support in the 1,259 area. The main trend remains strongly bearish.