It all started with the breakout of the 1.3000 level and since then there has been no respite for the Pound against the Dollar in a rather straightforward move of over 400 pips.
Technical support after technical support continues to give way and now we are heading for a test of the 1.2500 level. That and the 61.8 retracement level @ 1.2495 will provide the next key layer of defense for the pound.
There are several reasons why the pound is in trouble and that hasn’t really changed. For one thing, the dollar itself is also firmer this month with a strong build up towards the Fed on May 4th. Add to the fact that the BOE suddenly feels a bit timid when it comes to rate hikes, it doesn’t help the case for the pound.
Then you have the sentiment game where the pound has behaved a bit like a high beta currency lately and the more lethargic risk mood over the past few weeks certainly hasn’t helped in that regard.
Add a key technical break after several attempts to hold at 1.3000, and the floodgates have certainly opened.