Cable slumped to its lowest levels since September of 2017 on Monday, as fears over the possibility of a hard Brexit took hold.
In an interview with the Sunday Times published on August 5th, Trade minister Liam Fox estimated a 60% chance of a no-deal Brexit taking place. This ‘hard Brexit’ would leave the EU and the U.K. without a predefined agreement after Britain officially leaves the EU in March 2019. Fox blamed Brussels ‘intransigence’ for the looming crisis.
Prior to this, the pound stumbled after foreign secretary Boris Johnson resigned on July 9th, increasing the possibility of a no-deal Brexit. Johnson claimed in his resignation letter that the UK was headed “for the status of a colony” if Theresa May’s Brexit plans were adopted.
The prospect of a hard Brexit increases uncertainty for U.K. businesses and is likely to continue pressuring sterling.
Looking at the weekly chart we can see that price is nearing the major 61.8% retracement level from the upmove that began in January of 2017. This 61.8% support level is at 1.2894 and the prior low of 1.2769 stands out as potential support beneath.