By Carjuan Cruz
Investing.com – Political uncertainty in the UK joins recession fears among factors weighing on financial markets, with the pound falling below $1,190 for the first time since March 2020, when lockdowns began. the Covid-19 pandemic.
In addition to resignations in the cabinet of Boris Johnson, Prime Minister of the United Kingdom, weak economic data and a general advance in the dollar are added. What has caused the collapse of the pair that has even touched lows of 1,187
“Currently the pair maintains a strong short-term bearish bias according to the indicators on the daily chart, although the RSI is close to oversold conditions,” explains Jorge Tobares, financial analyst at the firm ProfitWay.
Tensions will keep the currency weak
Concerns about the slowdown or stagnation of the economy, high energy prices, the geopolitical scenario and the current political tension intensify projections that the pound will remain weak.
“The political difficulties in the United Kingdom, with the resignation of the Ministers of Finance, Health and Children, do not pay off in investor sentiment. Once again there is talk that Boris Johnson is on the tightrope and that he could be replaced in the coming months, ”explains Jorge Gordillo, director of economic and stock market analysis at CiBanco.
Key short-term resistance is given by the 20-day moving average, currently at 1,218, Tobares said.
“A recovery of this level could relieve short-term bearish pressure. But, a loss of 1.170 could plunge GBP/USD towards the 1.1500 zone on its way to 2020 lows around 1.1410”, explained this specialist in technical analysis.