GBP/USD gapped down at the market open on Monday, reaching fresh lows of 1.1995.
The admission from Theresa May, over the weekend, that she would be prioritising immigration control over access to the common market, as part of Brexit negotiations, suggested a hardening of her stance on Brexit.
This, combined with the EU’s insistence on requiring freedom of movement for the UK to maintain access to the common market pointed to the UK not maintaining membership of the common market.
Pulling out of the common market as well as the EU is expected to cause a slowdown in the UK economy, and this weighed on the Pound early on Monday.
From a technical standpoint, the short-term bearish trend continues to extend and is expected to push even lower.
The next major support area for the pair is at 1.1859, and a move down to that level is forecast.
A break below the 1.1995 lows, however, would first be required to confirm further downside.
The MACD remains below the zero-line indicating that the trend is bearish.
It also looks poised to move down in another leg lower.
An Elliot wave analysis suggests the move down from the early December highs is probably a fifth and final wave lower, which will probably reach as low as the 1.1450 lows, further corroborating the bearish analysis.