Since the beginning of February, the Pound was losing its positions against the US Dollar amid a growth in demand for the USD and weak macroeconomic releases in the UK. In the second half of the last week, the pair managed to start strengthening while market participants were expecting strong data on retail sales in the UK.
However, last weekend, the British currency came under extremely strong pressure when the UK stated the country might leave the EU. The GBP was falling with no corrections, reached the level of 1.4170 and consolidated above it. Now, the issue of the UK possible exit from the EU will determine dynamics in the pair.
No important macroeconomic releases are due today in the UK and the US.
Support and resistance
From the technical point of view, the pair has reached the lower border of a descending range and should start correcting up. In the medium term, the GBP is expected to continue falling towards 1.4100 and 1.4080 (recent local low).
Support levels: 1.4170, 1.4100, 1.4080, 1.4050, 1.4000, 1.3970, 1.3910, 1.3850.
Resistance levels: 1.4245, 1.4285, 1.4330, 1.4425, 1.4510, 1.4565, 1.4600, 1.4670, 1.4740.
Short positions can be opened from the current level with the target at 1.4080. Pending sell orders can also be placed at 1.4245, 1.4285 with the target at 1.4100 and stop-loss at 1.4310.