GBPUSD Elliott wave analysis: Brexit pessimism drives Sterling lower

The Cable slumped on Tuesday toward 1.22 following lack of progress in the Brexit plan. The following GBPUSD Elliott wave analysis looks at what could happen next.

October 08, 2019 | AtoZ Markets – GBPUSD is close to hitting 1.2205 intraday low and might head to 1.21 afterwards. Brexit headlines will continue to drive Sterling prices before the deadline day on October 31. The market sees the Brexit talks collapsing. A deal is increasingly becoming difficult and almost impossible. The bears are expected to remain in control to 1.21 at least.

Fundamental analysis: Fed, US-Sino talk and Brexit summary

UK PM Boris Johnson is under serious pressure ahead of the Brexit deadline. He has just three weeks to get an acceptable deal for the EU. Meanwhile, French Minister Macron has given Boris until Friday to come with a new proposal for the group to debate on in Brussels.

The EU leaders will meet on October 17-18 to discuss top agendas especially the Brexit and depending on Boris’s proposal, it remained to be seen if the council will accept UK ‘s exit plan ahead of the deadline on October 31. If a deal happens, GBP will soar, otherwise, a fast fall will follow. Meanwhile, the most likely scenario is another extension and if this is the case, the Cable would breathe and make minor recoveries. A no-deal exit will result in a big crash.

Outside Brexit, the US Fed Reserve will release the outcome of its FOMC meeting later in the week. Afterwards, the US and China delegations will meet in Washington to discuss possible ways to end the trade war between the two world’s biggest economies. It’s going to be a big week and a big month for the Forex market especially the Cable.

GBPUSD Analysis: important price levels

Support Levels: 1.2205 and 1.196. The price is about to break below 1.2205. If it does, it is expected to head toward 1.196.
Resistance Levels: 1.2412 and 1.2585. The bears are taking the price away from these levels. However, if the bulls resume, a break above 1.2412 will lead to further rallies to 1.2585 and the 1.3 handle.

GBPUSD Elliott wave analysis

The bullish correction from 1.196 seems to have truncated at 1.2585. However, until there is a breach below 1.196, the recovery might continue as expected in the last update. The chart below shows a possible zigzag pattern from 1.2585.

The pattern is expected to hit a support zone at 1.21-1.205. If it bounces and breaks above the thick blue channel, GBPUSD price is expected to advance above 1.2585. On the other hand, if it breaks below the zone, we will most likely see a breach below 1.196.

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