GBP/USD falls to a low of 1.3038 on the day
If there’s one things traders dislike more than anything else, it’s uncertainty. This week promises to be a really uncertain one for the pound as Theresa May could potentially be facing at a no confidence vote and traders will have to deal with the possibility that she may not be at the helm come the end of the week.
With GBP/USD gains capped by the near-term trendline resistance, we’re seeing a move back lower now in the pair as the dollar gains traction on the day alongside some pound weakness. The quid is the weakest performing major currency together with the yen on the day.
For now, cable looks set to move back towards a test of the swing region support around 1.3015-20 with further bids around 1.3000 to help provide additional support towards the downside. But it’s all about headline risks for the pound and that’s what traders will have to deal with this week.
We’re entering a phase of the year where dollar bids are generally more often to come by as funding demand starts to grow for the greenback. That should help to underpin the greenback on days like these as other major currencies are facing setbacks of their own — the euro seeing Italy’s bond market surrender gains and the pound weighed down by British politics.