GBP/USD drops further below 1.3800 to fresh 3-week lows on risk aversion

• USD gains momentum on risk aversion. 
• Wall Street drops sharply on Friday, add losses to an already terrible week. 

The GBP/USD pair extended losses during the American session on the back of a slide in equity prices. Risk aversion also affected the pound. 

The Dow Jones was falling 400 points or 1.68%, at the lows, with crude oil down more than 3%. The negative tone boosted the demand for safe-haven currencies like JPY, CHF and USD. Cable dropped to 1.3760, hitting a fresh 3-week low. It was holding near the lows under pressure.  

Earlier today the pound was already weak on the back of UK data. Comments from Michel Barnier (EU Brexit negotiator), who said “the transition period is not a done deal”, intensified the negative tone that was recently reinforced by risk aversion. 

GBP/USD was about to end the week with a decline of more than 300 pips, the worst performance since October. 

Levels to watch 

In the short-term support, levels might lie at 1.3730/40, 1.3695 and 1.3610 (Jan 3 high). On the upside, immediate resistance could be seen at 1.3830/40, 1.3895 and 1.3945.