GBP/USD Dips to 1.30 as UK Reportedly Rejects the EU’s Latest Brexit Offer
Matt Weller, CFA, CMT March 8, 2019 1:23 PM
Just hours ago, my colleague Fawad Razaqzada noted that “it was not clear whether any real progress was made by Britain and the European Union in reaching an accord.” While there haven’t been any official statements, much less votes, the EU’s latest offer has reportedly been called a “non-starter” by the DUP and not enough of a change from the previously rejected offers.
We’ll see what this weekend’s wrangling brings ahead of Tuesday’s vote, but the early signs aren’t promising. Forward-looking traders have already started selling GBP/USD, taking the pair down to test the 1.30 handle at the European session close. As the chart below shows, the 61.8% Fibonacci retracement of the most recent rally comes in at 1.2990 and may provide near-term support.
Bullish readers may want to watch for the RSI indicator to break out of its bearish channel before committing too aggressively – note that GBP/USD’s RSI broke out of its channel a day before price eclipsed its corresponding bearish channel back in mid-February.
That said, GBP/USD has “only” corrected 360 pips over the past 8 trading days; to match the late January / early February correction, rates would have to fall approximately another 100 pips toward the 78.6% Fibonacci retracement near 1.2900 over the next 7 trading days.
Source: TradingView, FOREX.com
As ever, traders will keep a close eye on Parliament to handicap which of these scenarios is more likely…
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.