GBP lower ahead of weekend Brexit negotiations: GBP/USD, EUR/GBP
Joe Perry December 11, 2020 5:44 PM
Boris Johnson set the new deadline for to a trade deal to be done on Sunday night.
Earlier in the week, we discussed how Brexit headlines would cause volatility in GBP pairs. As it turns out, the last 2 days were full of volatility for GBP pairs.
Yesterday, UK Prime Minister Boris Johnson and EC President Ursula von der Leyen met in Brussels for dinner, as well as, to discuss Brexit. The outcome was not hopeful. Boris Johnson said it is “very, very likely” that there will be a no-deal Brexit. Talks are deadlocked. However, talks will continue through the weekend, which means there is still a chance that something will be done….perhaps a skinny Brexit deal? Watch for large gaps in GBP pairs on Monday!
GBP/USD has not lost hope yet! The pair has been trading in an upward sloping channel and formed a shooting star candlestick in December 4th at previous resistance near 1.3500 as it became less and less likely a Brexit deal would get done. GBP/USD began pulling back and today tested the bottom, upward sloping channel of the trendline, as well as the 50% retracement level from the September 23rd lows to the December 4th highs. The pair has now sold off nearly 400 pips in 6 trading sessions. Support is near todays lows at 1.3134 and then 1.3109. If price gaps open lower on Monday, longer term horizontal support is at 1.2670. If GBP/USD is bid on Monday morning, resistance is at the December 4th highs near 1.3541 and then the March 1st, 2018 lows just above 1.3700.
Source: Tradingview, Forex.com
EUR/GBP has been shot out of a rocket! The pair has been forming a symmetrical triangle since mid-March, and more recently, had been trading in a downward sloping channel, within the triangle, to the 61.8% Fibonacci retracement level from the March 19th highs to the April 30th lows. EUR/GBP posted a false breakdown below the triangle and traded back into it on December 2nd, while also breaking out of the top of the downward sloping channel near 0.9000. Today, the pair moved broke out of the top of the triangle near 0.9200. If the GBP is lower on the Monday open, resistance above in EUR/GBP is at the December 11th highs near .9293. The March 19th highs are near 0.9500. If GBP is stronger on the Monday open, there is strong horizontal support near 0.8875. Below there are the April 30th lows near 0.8670.
Source: Tradingview, Forex.com
Boris Johnson set the new deadline for to a trade deal to be done on Sunday night. If there is no deal, watch for GBP pairs to gap lower on the reopen after the weekend. If there is a deal, or at least a deal in principle, watch for the Pound to gap open higher on the reopen. Traders should make sure to use proper risk/reward over the weekend if trading GBP pairs.
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.