The pound rallied yesterday upon EU’s chief negotiator Barnier comments that a deal in Brexit could be realistically expected in a timeframe of 6 to 8 weeks under certain circumstances. Analysts noted the benefits for both the EU and the UK of a Brexit without problems and commented that “if negotiations about Brexit go well it naturally becomes a tailwind for the pound”. Across the Channel, conservative hard Brexiteers seem to be dividing Theresa May’s own party and are preparing for another fight, this time regarding how EU law will apply after Brexit. Should there be further developments on the issue we could see volatility rising for the GBP.
GBP/USD rallied yesterday, breaking consecutively the 1.2960 (S2) and the 1.3020 (S1) resistance lines, now turned to support. We could see the pair continue to trade in a bullish market as there are positive forecasts for the pound’s financial releases today while on the other hand, there is a lack of substantial financial releases for the greenback. It should be noted though that the RSI indicator in the 4-hour chart, is near the reading of 70, implying that the long position for the pair could be overcrowded. Should the bulls continue to push the pair’s price action, we could see it breaking the 1.3080 (R1) resistance line and aim for the 1.3150 (R2) resistance hurdle. Should on the other hand the
bears take over and the pair starts correcting lower, we could see it breaking the 1.3020 (S1) support line and aim for the 1.2960 (S2) support level.
- Support: 1.3020 (S1), 1.2960 (S2), 1.2895 (S3)
- Resistance: 1.3080 (R1), 1.3150 (R2), 1.3215 (R3)
Uneasy calmness on Monday, regarding trade wars
After the issue of warnings on behalf of the US government, for additional tariffs on Chinese imports, China has responded that it will retaliate if the US takes any further action on the issue. Asian markets were struggling to avoid new losses as the US-Sino trade disputes continue to raise risk avoidance among investors. Though analysts point out that currently, there seems to be an uneasy calmness about the issue from the US side and the USD seems to pause its recent rally. Should there be further headlines on the issue we could see volatility rising again for the USD.
AUD/USD traded in a sideways manner yesterday, constantly teasing the 0.7115 (S1) resistance line and finally breaking it, turning it to support, during today’s Asian morning. We could see the pair continue to trade in a sideways movement, however it may prove sensitive to any further trade friction headlines. Should the pair come under selling pressure once again, we could see it breaking the 0.7115 (S1) support line and aim for the 0.7060 (S2) support barrier. Should investors favour the pair’s long positions, we could see it breaking the 0.7160 (R1) resistance line and aim for the 0.7200 (R2) resistance zone.
- Support: 0.7115 (S1), 0.7060 (S2), 0.7000 (S3)
- Resistance: 0.7160 (R1), 0.7200 (R2), 0.7240 (R3)
In today’s economic highlights:
During the European session, we get from the UK the employment data for July and from Germany the ZEW indicators for September. In the American session, we get the number of house starts from Canada for August, while later on the US API weekly crude oil figure is to be released. As for speakers, UK Finance Minister Philip Hammond and Riksbank Governor Stefan Ingves speak. Should you also be interested in the oil market, please refer to our weekly oil outlook, due out later today.
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