GBP/USD: market wonders whether the pound has based?

GBP/USD is flat and consolidating at 1.2430 after last week's incredible flash crash that has left markets wondering whether Sterling has based here or not.

GBP/USD dropped from 1.2614 to reported lows around 14 cents lower while the pound remains highly vulnerable due to UK PM's recent hard Brexit announcements. Meanwhile, the value of the pound is serving a purpose for the BoE.

"While it can be argued that UK officials want a weak pound, we doubt the BoE would see the risk-reward of cutting as attractive in this environment and with confidence in the pound now so fragile," explained analysts at Bank of Tokyo Mitsubishi, adding, "Recall also, Governor Carney's infamous comment that Brexit would raise risks for the pound given the UK was dependent on the “kindness of strangers” for financing its record current account deficit."

GBP/USD levels

"We have a near term resistance line at 1.2937 (nearby high is 1.3056) and will consider that the market remains directly offered below here," explained analysts at Commerzbank, adding,"Below 1.1938 we target the 1.0463 1985 low."

Valeria Bednarik, chief analyst at FXStreet suggested technical readings are still partially distorted by the sudden decline, but the risk remains towards the downside amid the persistent negative sentiment towards the Pound.

"Daily basis, technical indicators maintain their sharp bearish momentum, with the RSI indicator heading south around 19, but none indicating downside exhaustion ... Selling interest is probably aligned around 1.2500, although a recovery above this last could see the pair recovering up to the mentioned 1.2620 level."