British pound breaks lower: how low can it go?
The pound has broken lower this week despite some oversold conditions, so let’s examine how far it can go. The GBP/USD cross broke important trendline support, which had held so beautifully last week, as you can see in the chart below.
The trendline break at 1.2950 has triggered selling pressure as far as 1.2846 (as I write) and this is below the August low of 1.2863, so there’s no reason we can’t re-test the low for this year. This was set a couple of weeks after the Brexit vote when the pair hit 1.2796. This is a level not seen since June 1985 and the low of that month was 1.2565, which could well be a realistic target if we break 1.2790.
GBP/EUR is obviously in a similar sort of mess having fallen to a low so far on Monday of 1.1434. We have therefore broken the August low of 1.1459 and could be headed for a test of the three-year low at 1.1399, seen in August 2013.
Just below here we have the low for 2013, seen in February of that year at 1.1340, so this could be the first target for the next move lower on this currency pair. A break below the 2013 low would be a significant event and likely to target 1.1286, then 1.1250.
The pound is losing further ground against the Japanese yen, which has been strengthening for over a year now. We have the August low at 129.22 and the July low at 128.81, with a break below these levels likely targeting 127.20 and then 125.90/125.60.
GBP/AUD is closing in on the low for this year at 1.6716 and, as I write, we are only about 50 pips away. I certainly would not bet against a break lower to target 1.6642. Further losses could then see 1.6569 before the 2011 high at 1.6486.
Technical Analyst & Trader
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