On Tuesday, 5th of July the British pound hit a fresh 31-year low against the dollar by falling to the key level of 1.30 , as investors worried about the economic and financial fallout of Britain's vote to leave the European Union.
This morning, the GBP/USD pair is continuing to fall. Currently, the pound trades near the level 1.29 by losing over 0.5%.
The British pound has lost more than 14% of its value since last month’s referendum, as investors fret about the impact on the U.K. economy and continuing uncertainty about the country’s political direction
"Sterling hasn't yet reached a post-referendum equilibrium - the risks are still very much skewed towards it trading lower from here," said RBC Capital Markets currency strategist Adam Cole. "It will take several more weeks at least for the markets to take on board the news we've had."
As MarketWatch notes, “The Bank of England is highly anticipated to cut interest rates and roll out its quantitative purchase program from the garage. The net result could be that it may drag the British pound even lower,” said Naeem Aslam, chief market analyst at Think Forex in a note.
“Having said that, we are at a level which has not been seen since 1985 and this should trigger some sort of alarm that we are way too oversold in this downward momentum,” he added.
The Bank of England meets next week and traders have largely priced in a rate cut.
The resistance levels for the Pound are 1.3112 and 1.3334. The support levels for the GBP/USD are following 1.2885 and 1.2790
This morning, during the Asian trading session Gold surged to a two-year maximum level of $1370, extending the rush to haven assets since the U.K. voted to leave the European Union.
As MarketWatch reports, “Investors have been snapping up gold as the value of the euro and pound sterling have fallen in the wake of the Brexit vote. The British pound slumped to a 31-year low overnight, and comments from the Bank of England renewed worries about prolonged uncertainty in Europe. BOE Governor Mark Carney said Tuesday the central bank wouldn’t be able to completely mitigate economic pain.”
“Right now, it is the safe-haven demand for gold that is dominating. The feeling among investors is there is a lot of risk, so let us pile into gold,” said Gnanasekar Thiagarajan, director of Commtrendz Risk Management.
The next big driver of gold prices will be the release on Wednesday of the U.S. Federal Reserve’s committee notes from its last meeting. The U.S. Federal Open Market Committee kept rates unchanged at its June 14-15 meeting, and the minutes are likely to provide insights into that decision as well as about its intentions on rates in the future. (MarketWatch)
The resistance levels for Gold are $1370 and $1395
The support levels for Gold are following $1357 and $1342