Top Story

GBP/USD Back Above 1.30 as Barnier says Brexit Deal “Realistic” in 6-8 Weeks

Sometimes, it’s best to keep the analysis simple.

As the informal “deadline” for a Brexit deal draws nearer, sterling is becoming more attuned to headlines about the likelihood and structure of a deal. The UK’s relationship with its peers in the European Union is rapidly becoming the factor to watch when trading the pound, trumping central bank actions and traditional economic data.

Therefore, it’s not surprising that GBP/USD has spiked following today’s headlines from chief EU Brexit negotiator Michel Barnier that an agreement is “realistic” in 6-8 weeks. A subsequent report from the Guardian that a Brexit summit was likely to be scheduled for mid-November, adding some meat to Barnier’s comments. While we’ve seen similar “false dawns” before, rhetoric and actions around a potential Brexit deal have taken on a distinctly positive tone of late (see “GBP/USD Hits 3-Week Highs on Bullish Brexit Chatter” for more) , raising the prospects of a GBP-positive deal in the coming weeks.

Technically speaking, GBP/USD has spiked above 1.30 on the headlines to peak above both its bearish trend line off the early May high and its 50-day moving average. A close near today’s highs would give bulls more confidence that the trend is indeed turning higher. In that case, the next level of resistance to watch will be the late July highs and the 100-day moving average around 1.3200. Conversely, a failure to hold today’s breakout could lead a small dip, but the near-term rising trend line around 1.2900 should provide an intraday floor as long as Brexit rhetoric maintains its positive tone.

As a final note, while Brexit developments will remain (pun not intended) the primary factor driving trade in cable, there are a couple of economic developments to watch this week. Tomorrow’s trade brings the monthly UK jobs report, with economists expecting +3.6k net new jobs and wages to rise at 2.5% year-over-year. Then, Thursday brings the BOE meeting, though having just raised its benchmark interest rate to 0.75% last month, little intrigue is likely.

 

Source: TradingView, FOREX.com


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.

The markets are moving. Stop missing out.

OPEN AN ACCOUNT