Sterling broke through critical 1.20 support much easier than initially anticipated
Cable easily broke through very important 1.20 support zone despite my expectations to show at least some hesitation here.
It seems that the situation is more serious than estimated and traders in panic flee from sterling, mainly into so far number one safe haven asset – US dollar.
The pair is down 10% in less than two weeks, with the further losses being so far unmeasurable after critical 1.20 support zone was lost.
With corona virus pandemic easing in China but gaining pace in Europe at the USA, fears of possible catastrophic scenario mobilized governments and central banks, which took extraordinary measure to at least cushion the negative impact that threatens to devastate global economies.
Strong demand for the US dollar is one of key factors for pound’s weakness, followed by strong uncertainty as there are so far no signs when the crisis is going to peak and no talks about possible easing.
I have an experience in living epidemic, crisis and war and have quite good experience with mass psychology in such circumstances, when panic rules and this could be the third crucial factor that strongly pressures pound.
Technical studies and economic news proved to have no or minor impact in such situations that increases uncertainty about the depth of pound’s fall.
Post Brexit vote lows at 1.15 zone mark next significant support which could be wiped out easily if bears continue to hold full control and produce further panic selling.
Headlines will watched for fresh signals.
Res: 1.1958; 1.2000; 1.2047; 1.2095
Sup: 1.1800; 1.1700; 1.1591; 1.1500