Pound Sterling slumps below 1.24 on Wednesday after a rally to 1.25. The following technical analysis is based on the Elliott wave theory.
September 25, 2019 | AtoZ Markets – GBPUSD has continued the bearish move from 1.258. The price was a bit non-directional last week after the surge to 1.258 was followed by a dip to 1.25 before the week closed. Earlier this week, the Cable continued below 1.25 and was just 15 pips shy of 1.24. A minor rally followed to 1.25 after PM Boris lost against the parliaments at the court.
Lawmakers in the UK returned to the parliament today. On Tuesday, the court ruled out an attempt by Prime Minister Boris Johnson to suspend the parliament. It was tagged as unlawful. The British exit from the EU remains the major geopolitical concern as PM Boris was adamant that if the two parties could not agree on a deal, the UK will have to exit anyhow. However, he has a big stumbling block – the parliament. This uncertainty will put more pressure on the Cable even before the deadline in October. The US-China trade war is another big deal. Negotiations are expected to resume in October but Trump’s last comment at the UN Assembly has thickened the cloud over this.
GBPUSD Analysis: important price levels
Resistance Levels: 1.258 and 1.278 are the nearest resistance levels above the current price.
Support Levels: 1.23 and 1.195 are the support levels to watch if the current dip goes deeper.
GBPUSD Elliott wave analysis: long term forecast
As the chart above shows, GBPUSD long term trend is bearish and is completing a diagonal pattern since November 2007 at 2.11. The price slump could continue throughout 2019 and the first quarter of 2020. If this happens as expected, a GBP-USD parity is very much possible. If the UK and EU are not able to agree on a deal, this expectation will come much faster. What we can’t really say now is whether the diagonal is leading or ending.
GBPUSD completed a bearish impulse wave from 1.3385 in March 2019 to 1.2 in September 2019. A 3-wave bullish correction was expected to follow. The corrective rally to 1.258 is however shallow. The Gold price might be supported at 1.231 and then rally toward 1.27, 1.286 and even 1.309 before the long term bearish trend resumes.