Top Story

GBP/USD Hits 3-Week Highs on Bullish Brexit Chatter

Last week, we highlighted some encouraging signs from the joint UK-EU press conference, noting that “The EU’s willingness to extend the previous deadline suggests that a mutually acceptable deal may be near, though the Northern Ireland border remains a difficult sticking point” (see “GBP/USD in Rally Mode after EU-UK Brexit Presser” for more). Today’s big Brexit development suggests that we were reading the tea leaves correctly.

Midway through this morning’s US session, Chief EU Negotiator Michel Barnier stated that Europe is “prepared to offer Britain partnership unlike with any other country.” While short on details, this statement could well mark a turning point from the adversarial nature of the negotiations up to now. For his part, UK Brexit Secretary Dominic Raab expressed confidence that a deal was “within our sights,” a sharp improvement from peak “hard Brexit” fears a few weeks ago. With recent headlines suggesting that the window for negotiations could stretch into November, there’s still plenty of issue to hammer out, but both sides appear invested in reaching a mutually agreeable outcome.

Technical View: GBP/USD

Cable is tacking on over 50 pips in the wake of Barnier’s comments to hit 1.3000, its highest level in over three weeks. Though some short-term trend indicators are starting to improve, bulls face a heavy test from the bearish trend line off the May highs, which has capped rates on four separate occasions over the last couple of months. A definitive break above that level, if seen, could expose the late July swing high near 1.3200. Meanwhile, a reversal off that bearish trend line would hint at a move back down to retest the near-term bullish trend line or last week’s support near 1.2800.

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