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GBP/USD continues to lose ground, as the pound has dropped for a third straight day. In Friday’s European session, the pair is trading at 1.2296, down 0.26% on the day.
Pound Slips Below 1.23
The British pound has declined 1.4% this week, and has managed only one winning daily session in that time. The slide began on Wednesday, as investors reacted negatively to further turmoil on the Brexit front. In a key decision, the U.K. Supreme Court held that Prime Boris Johnson had acted unlawfully when he suspended Parliament earlier this month. The decision has weakened Johnson politically, with barely a month until the U.K, is expected to set sail and depart the EU. If there are further political developments next week, we can expect some volatility from the pound.
Technical Analysis
This week’s sustained downward movement has resulted in GBP/USD breaking below several support levels. On Wednesday, the pair broke through support at 1.2420 and 1.2380. GBP/USD tested support at 1.2320 on Thursday and again in the Asian session on Friday. Will the downward trend continue? The next support level is at 1.2255, which has held since September 9.
USD/CAD
USD/CAD remains range bound, with the pair showing little appetite to challenge barriers in either direction. In North American trade on Friday, the pair is trading at 1.3258, down 0.09% on the day.
U.S. Durables Could Spell Trouble for Loonie
The Canadian dollar is sensitive to key U.S. numbers, and a soft reading from a U.S. indicator could dampen risk appetite and hurt the Canadian dollar. The markets are braced for a sharp drop of 1.1% from core durable goods, which will be released later in the day. Any contraction in this indicator could sour investor sentiment and weigh on the Canadian currency.
Technical Analysis
There is immediate resistance at 1.3282. This line has been tested during the week but USD/CAD has not been able to sustain any upward pressure and consolidate above this line. We could see the pair continue to test this line in the North American session. Above, there is resistance at 1.3320, which has held since September 4. On the downside, there is strong support at the round number of 1.3200.
USD/MXN
It has been a good week for USD/MXN, which has climbed close to 1.0% this week. However, the pair has retracted on Friday. In the European session, the pair is trading at 19.63, down 0.16% on the day. The U.S. releases key data later in the day, which could impact on the movement of the pair. In particular, investors are braced for a sharp downturn in core durable goods orders, with a forecast of -1.1%. A soft reading could raise risk apprehension and weigh on risk currencies like the Mexican peso.