Pound slumps as “hard Brexit” looms

By Margaret Yang, CMC Markets
Sterling opened lower this morning in Asian trading hours as reports over the weekend suggested that Britain’s Prime Minister Teresa May will call a hard Brexit in her speech this Tuesday. Recent data also shows that currency traders are turning increasingly bearish against the pound in the options market.
GBP/USD opened at 1.1989 this morning – a level not seen since 7^th Oct 16. Technically, Fibonacci extension lines suggest the next support and resistance level for GBP/USD could be found at around 1.1870 and 1.2430 area respectively.
Asian markets are facing headwinds from rising political uncertainty in the west, which gave investors good reasons to take profits. Asian equities, including Hong Kong, Singapore, Korea and Thailand have all registered positive year-to-date return of 2%-4.5%. Selling pressure is surrounding the markets this morning due to profit-taking and risk-off sentiment.
Singapore’s Straits Times Index fell this morning as investors are becoming more conservative when STI challenging psychological resistance level of around 3,000 points. SPH’s Q1 net profit is down 43.8%, adding bearish sentiment to the upcoming earnings season.
Uncertainty is rising, along with gold prices. Gold broke out above a key resistance level at $1,193 last week and there is a reason for it to go higher if this uncertainty continues to rise.
GBP/USD

Margaret Yang Yan, CFA, is a market analyst for CMC Markets Singapore