How High can GBP/USD Go?
Joe Perry October 15, 2019 4:01 PM
Sterling should continue to move higher, with GBP/USD already up almost 1.5% on the day.
Earlier today, various officials have stated that the UK and the European Union are closing in a Brexit deal and even that a draft treaty could be published as early as Wednesday. However, later in the day, other officials tried to throw cold water on the euphoria that took over the markets by warning that even if negotiators do reach an agreement, Brexit will need to be delayed passed the “official” deadline of October 31st. But the timing of Brexit isn’t the story. The story is that negotiators are making progress and based on current statements from major players, progress is being made and a Brexit deal is in the works.
If it truly is the case, Sterling should continue to move higher, with GBP/USD already up almost 1.5% on the day. On a long-term time-frame (weekly), the pair closed above the downward sloping trendline from early in 2018 and the 50% Fibonacci retracement level from the high of the week of March 11th to the low of the week of September 2nd. However, the pair is about to run into a large confluence of resistance just above:
1) Horizontal resistance at 1.2865 from the weekly low in April
2) The 61.8% Fibonacci retracement from the high of the week of March 11th to the low of the week of September 2nd at 1.2837
3) The 38.2% Fibonacci retracement from the high of the week of April 16th to the low of the week of September 2nd at 1.2880.
Source: Tradingview, FOREX.com
If price breaks through 1.2900, above is horizontal resistance and the psychological resistance level of 1.3000. However, if GBP/USD breaks through 1.3000, there is only minor resistance on the way up to 1.3400!
Tomorrow the UK releases a host of inflation data. However, they should all be a side show to any ongoing Brexit negotiations and headlines.
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.