Sterling plunges amid escalating political turmoil in the UK

The British pound weakened sharply across the board on Wednesday, following renewed political instability in the UK. The sell-off was triggered by a major setback to Finance Minister Rachel Reeves’ budget proposal, after significant amendments to the welfare reform bill undermined her credibility and, by extension, that of Prime Minister Keir Starmer, who had publicly backed her.

Sterling (Cable) dropped nearly 1% on the day, erasing recent gains and forming a strong bearish daily candle that signals a potential reversal after six consecutive days of gains.

The technical outlook on the daily chart is deteriorating. The 14-day momentum indicator is turning lower and attempting to breach the neutral centerline into negative territory, while key support at 1.3579 is under pressure. This level represents the 50% Fibonacci retracement of the 1.3370–1.3788 rally and is reinforced by the convergence of the daily Tenkan-sen and Kijun-sen lines.

Shorter-term charts (4-hour and 1-hour) show bears taking firm control, increasing the likelihood of a deeper pullback.

A break below 1.3579 would confirm bearish continuation, opening the path toward 1.3530 (61.8% Fibo) and the psychological 1.3500 level, with stronger support located at 1.3397 — the top of the thickening daily Ichimoku cloud.

On the upside, the broken 200-hour moving average at 1.3642 now acts as initial resistance, followed by 1.3674 — the lower boundary of the recent consolidation range.

Res: 1.3618; 1.3642; 1.3674; 1.3712
Sup: 1.3530; 1.3500; 1.3469; 1.3397