GBP/USD attempts to recover from weekend's drop

Source: Dukascopy Bank SA
© Dukascopy Bank SA
"Even if the pound recovers somewhat in London, it seems as though the realities of a hard Brexit are still not fully priced in. It is difficult to make the case for the pound to avoid testing, probably breaking, the ‘flash crash' lows in coming weeks."  
– Westpac Banking Corp. (based on Bloomberg) 

Pair's Outlook 
Although the British currency managed to edge higher against the US Dollar on Friday, it still failed to maintain trade above the 1.22 level. Nevertheless, the 1.2150 threshold was preserved, but the Cable opened with a hard bearish gap today, now barely managing to hold above 1.20. Political factors, namely UK's access to the single market after Brexit is fully implemented, keep weighing on the Pound. Nevertheless, the Sterling is likely to erase some of the losses that occurred during the gap, while the weekly S1 acts as the closest resistance at 1.2045, which could prevent the GBP/USD pair from recovering.  

Traders' Sentiment 
Exactly three quarters of traders are now long the Pound, whereas 63% of all pending orders are to sell it.
© Dukascopy Bank SA

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