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Pound Sterling fell through a key support level against the Euro over the course of the past 24 hours, a move that could well spell further declines over coming days, if not weeks.
We had been looking for the July low at 1.1122 to hold out, noting that the Pound has shown itself to be uncomfortable at such a discount over recent days.
At the time of writing on Wednesday the exchange rate is quoted at 1.1115.
Expectations were that had the Pound-to-Euro exchange rate closed above 1.1122 then a sideways formation and consolidation might be setting in as traders adopted a wait-and-see approach to Sterling ahead of a busy Autumn in terms of Brexit, however selling pressure is as of yet showing little signs of abating.
"Pound sentiment has deteriorated as Brexit uncertainty shows mounting signs of slowing the U.K. economy. A run of weak U.K. data suggests that Britain may have one foot in recession if second quarter growth contracts as many fear. Key U.K. data looms Wednesday that if solid could lend the pound some momentary support," says Joe Manimbo, a foreign exchange analyst with Western Union.
Technical selling pressure in GBP/USD, has combined with the chronic political uncertainty and increasing fears that the UK economy is slowing down, to prompt further losses by Sterling against the Euro.
Justin Low, a technical analyst with ForexLive says the market is looking to try and break below the 1.11 psychological level in GBP/EUR, which equates to the 0.9000 psychologically significant 0.90 level in the inverse EUR/GBP pair.
"The move lower in the Pound also sees GBP/USD fall to a low of 1.2444 from around 1.2460 to start the session," says Low. "It's pretty much the same tale for both currency pairs with EUR/GBP flirting with a break above a key level at 0.9000 and GBP/USD flirting with a daily break below the year's lows around 1.2440. Both are coming about as the Pound holds weaker in trading this week."
Where next for the GPB/EUR exchange rate now it has suffered a technical deterioriation?
Technical analyst Karen Jones with Commerzbank in London says the Euro "looks to be resuming its upmove and for now we will simply go with it."
Jones says the strengthening Euro could push the GBP/EUR exchange rate lower to break through the last defence for a test of the 1.0965 December 2018 low.
Beyond here, the all-time lows come into view with Jones ultimately eyeing the 2008-2019 support line down at 1.0816.
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