The biggest story in the market was the sharp decline of the British pound on Monday. Sterling touched its lowest level since October on hardening Brexit talk and we are curious to see whether the 1.21-level will be able to withstand the downward pressure. In case of a dip below 1.21 a next lower target could be at 1.2080 but this should be the lower bound of a short-lived downward trend. Those who bet on a pullback now, should focus on prices above 1.2080 to evaluate their positions. If the pound drops below that level we expect accelerated bearish momentum, driving the pound towards 1.19. In case of pullback in the GBP/USD, we expect the 1.2230-level to act as a short-term resistance. Anyway, yesterday was a profitable trading day for sterling traders with our short entry providing a good gain.
The euro rose towards the upper bound of its current trading range and we will now focus on the 1.0640/60-resistance area. There is a risk that the single currency may overshoot the 1.0670-level and head for 1.0850 following a stronger upward correction. On the downside, the 1.0480-level remains in focus.
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