GBP/USD down a 100 pips
Candidates to take over from Theresa May ramped up no-deal Brexit talk in the final stretch of the leadership race. Both Hunt and Johnson today said the Irish border backstop will need to be scrapped.
That’s a thorny issue that has never come close to a solution that could be embraced by the EU, coalition partner DUP and parliament. The losses extended after a concrete sign that Johnson may be ready to take action to suspend parliament around the time of the Brexit expiration date on October 31.
Technically, today’s low of 1.2397 marked the worst level since April 2017 and it breaks that major support line.
That leaves little in the way of a test of 1.2000. Technically, it’s tough to argue against shorts but what has me worries is that positioning is already deep into shorts and the political rhetoric doesn’t reflect parliament.
Another one to watch is GBP/JPY, which still has a bit of breathing room ahead of the flash crash low.