GBP/USD to 1.22

GBP/USD to 1.22

GBP/USD to 1.22

One of the worst performing currencies today was the British pound which fell sharply against all of the major currencies. Having broken below 1.2380 and the 50/100-day SMA, GBP/USD extended its losses below 1.23 and appears poised for a deeper slide to 1.22. Manufacturing activity slowed more than expected in the month of February triggering a deep slide in the currency. The rest of the data was mixed. BRC shop prices dropped less than expected, falling by 1.0% when a drop of 1.4% was expected. Nationwide house prices data showed an increase in February by 0.6% when only an increase of 0.2% was expected. Net consumer credit fell in line with expectations at 1.4b. Mortgage approvals saw a bump in January coming in at 69.9k vs.68.5k expected. Also, Brexit remains a sore spot for pound -- Theresa May’s Brexit bill is expected to be defeated in the House of Lords, causing more back and forth on the terms of exit. The issue are rights for EU citizens residing in the UK. An amendment to the bill guaranteeing rights to EU migrants living in the UK would prolong the process and add uncertainty. It won’t stop Article 50 from being triggered but puts Brexit back in the headlines. Between a possible Scottish referendum and the trigger of Article 50, March could be a tough month for GBP.

Technically, having broken below the 50 and 100-day SMA, there is some support for GBP/USD at 1.2254, the January 18 and 19th low but the main support level is at 1.22. As long as GBP/USD holds below 1.2450, the downtrend is intact.

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