Sterling ratcheted lower after Brexit fears continued to escalate following comments from Chief EU negotiator Michel Barnier after negotiations were called off. After three weeks, Barnier said that results were “disappointing.” Bank of England officials were also seen examining unconventional monetary policy measures following their meeting earlier this month. GBP/USD closed at 1.2105 in New York on Friday from its 1.2230 opening. In early Sydney this morning, Sterling slid further to a low at 1.2070, not seen since March 26. The UK also faces some big Covid-19 challenges which add weight to the sliding Pound.

GBP/USD has immediate support at that 1.2070 level followed by 1.2040 and then the psychological 1.2000 support level. Immediate resistance can be found at 1.2150 and then 1.2200. We reported last week the net speculative GBP short bets were increased to -GBP 12,005 from the previous weeks -GBP 6,681. The net amount is not large and represents 12% of the yearly short highs. Look for some high volatility in the British Pound as Brexit shares the headlines with Covid-19. Likely range today 1.2050-1.2170. Prefer to sell rallies but am prepared to trade both sides as vols ramp up.