GBP/USD in Rally Mode after EU-UK Brexit Presser
Matt Weller, CFA, CMT August 21, 2018 7:37 PM
The constant trickle of Brexit headlines continues to drip out, with today’s developments taking on a relatively positive tone.
While the two chief negotiators, Michel Barnier and Dominic Raab, still acknowledged the potential for a no-deal / “hard” Brexit, they noted that negotiations were in their final stage and will occur continually from now on. Perhaps most importantly, EU negotiator Barnier suggested that the October deadline for agreeing to a Brexit deal could be extended slightly. 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.
In any event, traders are viewing the recent developments favorably, with pound sterling rising against all but one of its major rivals on the day (New Zealand’s kiwi being the lone exception). Technically speaking, GBP/USD is trading up by more than 250 pips off last week’s lows. Today’s price action so far has created a bullish “marubozu” candle, signaling strong buying pressure and pointing toward a likely continuation as we head into the middle of the week.
Though the near-term momentum sits firmly with the bulls, the longer-term bearish trend remains intact. The next levels to watch this week are previous-support-turned-resistance around 1.2960, potential psychological resistance at 1.30, and if those levels break, the three-month bearish trend line near 1.3100.
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.