While cable is in positive territory in 2020, a no-deal Brexit would probably have an impact on the UK economy that would lead to a drop by the pound against the U.S. dollar in January.
The British pound fell on Friday, reversing some of its recent gains, as European Union chief negotiator Michel Barnier warned that there were just hours left to reach a Brexit trade deal with London nL8N2IY1UY.
A no-deal Brexit would probably lead to a drop under the 1.3103 Fibonacci level, a 23.6% retrace of the 1.1413 to 1.3625 2020 rise.
That in turn would see a steeper drop to 1.2780 Fibonacci, 38.2% of the same year-long gain.
FX traders should beware that GBP/USD registered a new 2020 peak at 1.3625 on Thursday, shy of the major 1.3677 Fibonacci resistance, a 76.4% retrace of the 1.4377 to 1.1413 (2018 to 2020) drop.
The longer cable remains under this key supply, the more likely it will be that a deep technical setback will be seen.
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