Sterling loses its shine

Forex 4 minutes to read

Michael O’Neill

FX Trader, Loonieviews.net

Summary: GBPUSD is in free-fall and Prime Minister Theresa May and British politicians of all stripes are to blame.

May said she would reintroduce her withdrawal agreement during the week of June 3, perhaps forgetting that her deal has been resoundingly rejected three times. A Labour party spokesman said the party wouldn’t support the current Brexit bill and GBPUSD’s morning slide accelerated.

Democratic Unionist Party leader Nigel Dodds piled on suggesting May’s deal was likely to fail. The GBPUSD downwards slide from May 5 accelerated on the break of support at 1.2900 and again at 1.2880. The break of the 50% Fibonacci retracement level of the December-February range at 1.2950 targets 1.2687 on a break of the 61.8% Fibonacci level of 1.2618.

The price action for the rest of the G10 major currencies was subdued following a series of “mixed” US economic reports. April Retail Sales data was a tad weaker than expected, but a soft report was in the cards because of the blowout March report. The NAHB housing report was better than expected, US inventories were flat and Industrial Production data disappointed.

Canada CPI rose 2.0% in April, a touch better than the 1.9% increase in March. The results were expected. USDCAD chopped about in a 1.3456-1.3491 range following the news and is still trapped in that range. Traders are taking their cue from broad US dollar sentiment, which is underpinning the currency pair.

Wall Street opened in negative territory led by 172 point drop in the Dow Jones Industrial Average. Those losses have been pared in early trading, and the Nasdaq is actually higher on the day. (as of 14:00 GMT).

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