The pound has come under some significant pressure on Monday following Theresa May’s speech at the Conservative Party conference, in which she laid out plans to activate article 50 by March next year and begin the formal process of exiting the European Union.
While this won’t come as a surprise to anyone, it has been the catalyst for another bearish move in the pound which has held up quite well as the economy showed some early resilience to the vote. Against the dollar, the pound is now trading back near the lowest levels reached in the aftermath of the vote and those 1.2796 lows look likely to be tested in the coming sessions.
While I don’t think the sell-off is done, we are seeing some signs of fatigue in the move on the hourly chart which may suggest that before we see this level broken, we may first see some consolidation or even a minor correction.
The bears appear to have retaken control in the longer term but in the short-term at least, a retest of 1.2865 – 15 August lows – or 1.2915 may be on the cards. Above here 1.3050 could provide additional resistance.
