Flash Note: British Pound / US Dollar
Long term, we have seen the pair develop a large multi-year head and shoulder technical formation, where a breakdown occurred during June 2016 and with the Fundamental trigger being the Brexit Vote. Since then, the price has re-tested the breakdown level, and has since consolidated in a sideways trading range with highs (resistance) of roughly 1.3400c and lows (support) of 1.2000-1.2120. So far this monthly the pair is lower by 3%, with a fresh attack near the aforementioned support zone where a break and monthly close below this level opens up further weakness for the pound. The monthly Relative Strength Index (RSI) trades with a weaker bias at a current print of 39. It should also be noted that the right shoulder and current consolidation lie with a 9-year downward channel. Summary: Longer term, the pair remains weak and is vulnerable to fresh multi-year lows.
Trading Desk Analyst
Unum Capital (Pty) Ltd
An Authorised Financial Services Provider (FSP 564)