Post-Brexit GBP/USD outlook

After a historical day for the UK, we have seen huge volatility and it is worth looking at GBP/USD in response to the vote for a Brexit.

European flag
Source: Bloomberg

IN_GBPUSD has seen incredible volatility over the past 24 hours, with initial optimism throughout the polling period giving way to a sharp deterioration as the results began painting a very different picture.

Short-term price action has been understandably sizeable and as such, a longer-term picture is worth looking at for some sort of perspective. The monthly chart highlights the break through a whole host of key support levels, with the pair reaching a new 30-year low earlier in the morning.

The interesting thing to note is that the sell-off has been stemmed at a crucial descending trendine, with a substantial rally occurring since. Amid calls for substantial further downside in GBP/USD in the future weeks and months, that trendline support will need to be broken for the market to reach an area with little support.

On the four-hour chart, we can see an incredible morning star reversal pattern in play. It is not clear how long this bounce will last. However, it is worth watching out for the $1.3836 (previous 2016 low) and $1.4005 (previous June low) as key resistance points for the sellers to possibly come back in.

Ultimately we will continue to see wide swings in play for this pair, yet with such an incredible bounce occurring at such a notable support level, we are now seeing price approach key resistance.

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