After the massive rally from the dips of 1.385 to 1.450, this week started on a negative note as GBPUSD has rejected this level and now on its way back to test the lows of 1.4100. The major factor asides the technical resistance level at 1.450 is that the issue of Brexit is now getting more votes on the back of the terror attacks in Brussels yesterday, polls suggests many people are now considering voting to leave the European Union. It will be recalled that there has been 3 attacks in different parts of Europe in the last 2 months (Paris, Turkey and Belgium). Many voters of Brexit think it is not safe to be in European Union anymore.
Political reason could also be responsible for the sell-off of Sterling. Over the weekend, an important political figure resigned as from his post as minister of works and pension. This man is believed to be a strong supporter Britain leaving the European and Union and he is likely to influence voter’s decision.
Consumer price index data was released yesterday, unfortunately, it missed expectation. This shows UK economy is still far away from the 2% inflation target of Bank of England. Market was expecting CPI figure of 0.4% but the actual reading was 0.3%. This also had a knockdown effect of Sterling.
With the current trend, Cable might drop to the lows of 1.4100 and eventual 1.38 level again.