GBP risks losing further 5%

28 May, 2019

Now that United Kingdom traders are returning back to office following a public holiday, we should expect for the fallout from the Brexit Party’s success in the European Parliamentary elections to put the spotlight even firmer on the pressure for the next Prime Minister of the United Kingdom to secure a Brexit deal sooner rather than later. UK Prime Minister Theresa May’s resignation and the leadership race that will begin is sure to dominate at the top and centre of each political headline, but the problem that the British Pound faces is that if whoever succeeds to become the next Prime Minister does chase a no-deal Brexit, the Pound should sink below 1.25.

Hardline Brexiteers will have no appetite for another delay to the eventual date of the United Kingdom leaving the European Union and this is an issue for traders because if Boris Johnson does succeed, like many feel he will as the front-runner candidate, he has already made it clear that the time is up to deliver Brexit. This means that he will, if needed, settle for a no-deal Brexit and the British Pound risks losing a further 5% in such a scenario.

At the moment the GBPUSD has found a near-term bottom marginally above 1.26, but more Brexit pessimism can be priced into this market and this can also drive the GBPUSD to the lower 1.20’s as the second half of 2019 begins.

What would help buy sentiment for the Pound is that a great deal of GBP pessimism around Brexit has been priced in throughout the past couple of weeks. Boris Johnson is known to have a strong pro-Brexit stance and not as concerned about a no-deal outcome as others, but any news decreasing the chances of him winning the leadership race to become the next UK Prime Minister will be viewed as GBP-positive. There is also the remote scenario that Johnson pledges to secure a Brexit deal which no matter how unlikely this would appear today, would provide a positive shock to the GBP.  


Source   Presented by FXTM
Pound slips below $1.30 as BoE eyes rate cut

The British Pound slipped below $1.30 for the first time this year as expectations mounted over the Bank of England (BoE) cutting interest rates...

The pound may be in for huge gains

The British pound is in for some massive gains against it’s US counterpart according to one analyst as the threat of a hard Brexit subsides which will allow the...

Pound suffers over brexit doubts

Rumors in the market was the pound would rally pretty strongly in the aftermath of Boris Johnson's election win with such a large majority, which would...


Pound ends year with anxiety

The British pound on Tuesday experienced the sharpest decline in 13 months. The GBPUSD declined by 1.6% due to concerns over the hard...

Pound surges as UK elections exit polls

GBPUSD has gained over two percent to breach 1.35, reaching its highest level since May 2018, as the UK election's exit polls show the Conservatives...

Trading Election Day - GBP/USD

Going into today's election there is a slight "uneasiness" about the whole thing and that there is a sense of deja vu. Deja vu about what you might...


GBP/USD has one more resistance line

GBP/USD is trading in the mid 1.28s after Nigel Farage's Brexit Party boosted Prime Minister Boris Johnson's chances of winning. How high can cable climb?

Pound tumbles as Johnson seeks December 12 Election

Sterling fell out of favour with investors on Thursday after U.K Prime Minister Boris Johnson called for a general election on...

Pound's pullback creates buying opportunity

The British pound rally over the last week came to an abrupt end after a mixed day in the British parliament yesterday which still left many questions...