Markets numb to Brexit talk: EUR/USD, GBP/USD

Traders are tired of Brexit officials’ comments. They want to see action.

Brexit 10

With nine days left to negotiate a Brexit trade deal, comments and deadlines have become meaningless.  The market participants that are left trading through the end of year want to see action.  EUR/USD and GBP/USD are lower on the day, reversing most of yesterday’s afternoon rally.  These selloffs  are mostly due to the move higher in the US Dollar, and the pairs are disregarding Brexit comments.  According to FT, EU’s Barnier has made it clear that he is prepared to talk until year-end.  For the UK’s side, the Sun is reporting that a deal is on the table and both sides want to be home for Christmas eve, but talks are strained.  Why?  Fisheries.  So, a deal seems like it will be done, but markets may not react until pen is on paper!

GBP/USD

Yesterday’s move in GBP was primarily due to fears of the new variant of the coronavirus. Brexit took a backseat.  Traders took advantage of the move lower and bought the Pound vs the US Dollar.  Today, GBP/USD is having an inside day, disregarding further Brexit comments.  A done Brexit deal will move the pair aggressively (not just comments).  In addition, positive or negative news on the new variant of the coronavirus could move the pair. 

Source: Tradingview, FOREX.com

On a 60-minute timeframe, GBP/USD is coiling within a short-term triangle waiting for its next move.  Short-term resistance is at yesterday’s gap fill highs near 1.3500 and then Thursday’s highs near 1.2640.  Support is at yesterday’s lows near 1.3188 and then December 11th lows near 1.3135. However, be weary of light volume moves that can spike through support and resistance.

Source: Tradingview, FOREX.com

EUR/USD

EUR/USD traded 4 pips above yesterday’s trading range and therefore, cannot be considered an inside trading day.  Just as with the GBP/USD, the Euro pair has ignored seemingly positive Brexit comments. However, the pair is moving lower and bulls may be looking to buy at trendline support , which coincides with yesterday’s lows near 1.2129. 

Source: Tradingview, FOREX.com

On a 60-minute timeframe EUR/USD has retraced most of yesterday’s move, which is within 7 pips of horizontal support.  If price reaches the 1.2129 level, the RSI will also be oversold on the short-term time frame (and it will be at the daily longer-term support), and bulls will be looking to buy.  Below there, the next horizontal support level is at 1.2060.  Intra-day resistance above near 1.2200, then todays highs at 1.2256.  Above there, final near-term resistance is at Friday’s highs of 1.2272.

Source: Tradingview, FOREX.com

Traders are tired of Brexit officials’ comments.  They want to see action.  Outside of further coronavirus comments, these two pairs should remain stable heading into the Christmas holiday, unless of course, a Brexit deal is reached before then!

Learn more about forex trading opportunities.

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.