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Chart of the Day: GBPUSD

The British pound is testing support as the Bank of England’s policy outlook becomes more dovish. Market pricing of a cut probability is currently 67.1%.

GBPUSD daily chart

Over the weekend, UK chancellor Sajid Javid shocked industry by saying the UK will not be a rule-taker and there will not be alignment with the EU after 31 January. Javid has shown he’s comfortable with friction, which raised concerns about negotiations post-Brexit, and uncertainties about what those relationships might look like.

The sellers are in control as price action tests moving below the key 1.3000 level. While the channel between 1.2750 and 1.2950 has promoted buying in the past, it takes a brave soul to enter a counter trend move here as the pair pushes lower on GBP uncertainty.

UK PMI manufacturing data is due Friday, expected to print below the crucial 50 level at 48.8. Even softer than expected and we could see GBP bid down further.

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