Two trades to watch: FTSE rises on GBP/USD weakness amid more Brexit woes

With UK PM Boris Johnson once again warning that Brexit talks are in a serious situation, GBP/USD is coming under pressure. The softer tone around sterling is offering support to the FTSE which is trending cautiously higher.

Brexit 2

• Brexit trade deal hopes cool after Boris Johnson warns that talks are in a “serious situation”
• He said that the EU needs to shift its position on fishing substantially
• Talks look set to continue into the weekend with just 2 weeks to go until the end of the transition period.
• GBP/USD is coming under pressure, whilst the weaker pound is boosting the FTSE 100, which is trading mildly higher out-performing its European peers

Can GBP/USD hold above 2019 high 1.3514? 

After a sharp move higher across this week, GBP/USD is trending lower on Friday. It still trades above its 20 and 50 sma on the 4 hour chart and above its ascending trend line which dates back to late September suggesting that there could be some more upside. However, failure to break through resistance at 1.3620 in the previous session points to weakness in the price at that level.

The RSI moved away from the 70 overbought territory late on Thursday but remains in bullish territory and points northwards.

GBP/USD rebounded down off 1.3620 resistance falling to a session low today of 13520. An important support band exists around this level 1.3514/20, the high from 2019. A weekly close above this level would be significant as it plants a strong base for bulls moving forward. Failure to hold this level could see GBP/USD trend back towards 1.35 round number and convergence of 20 sma & horizontal support and then on towards 1.3450 an important level from this week. It would take a break below 1.34 to negate the current bullish trend.

On the flipside should 1.3515/20 hold then a move back to test 1.3620 (high 18 May’18) could open the door to 1.3720 (1st May ’18).

Learn more about forex trading opportunities



FTSE finds strength in pound weakness

After trending southwards in a descending channel across June – Oct, the FTSE broke out in November charging steeply higher before hitting an 8 month high of 6645 earlier this month. The positive momentum in the price action has slowed and the price is consolidating around 6545.

The FTSE trades above its 20 & 50 day moving averages suggesting more upside could be had. However, the RSI is providing mixed signals so caution should be had against aggressive bullish bets.

Immediate resistance can be seen at 6645 December high, beyond which 6700 comes into focus, a fresh 8 month high, prior to 6850.

Immediate support can be seen at 6475, the convergence of 20 sma and the lower band of a horizontal channel which has held since early December. A break through here could point to a deeper selloff towards 6300 round number and 6250 (December low) to negate the current bullish trend.

Learn more about index trading


More from FTSE 100

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.