Talking Points:
- EURUSD sitting at lowest levels in 13-months.
- GBPUSD gaps open below pivotal 1.6260 level.
- See the DailyFX Economic Calendar for Monday, September 8, 2014.
European FX selling pressure has intensified over recent days, and the bump in volatility and volume supports the USD-favorable breakout in prices. EURUSD is hovering near its lowest levels since July 10, 2013, and the recent breakdown may point to a further decline into the April and July 2013 lows near $1.2750.
Whereas the Euro breakdown has been pushed by a concrete catalyst - the ECB's decision to move forward with new easing measures - the British Pound's collapse since mid-July has been purely speculative. Concerns of the Scottish independence vote have intensified as a recent poll showed that the country with split from Britain - and the Pound.
The resulting gap lower in GBPUSD this week sees the pair slice through a formerly pivotal level at $1.6260, which has provided both support and resistance to the pair on numerous occasions the past two years, most recently from October through December 2013.
One potential knock-on effect of this Scottish vote, if they choose their independence, is that other European countries may become emboldened to exit their respective currency unions as well; if Scotland can leave the UK, why can't Italy leave the Euro?
Read more: Euro Punished by ECB’s New Measures as QE Remains on Hold
--- Written by Christopher Vecchio, Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
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