GBP lower ahead of weekend Brexit negotiations: GBP/USD, EUR/GBP
Joe Perry December 12, 2020 1:44 AM
Boris Johnson set the new deadline for to a trade deal to be done on Sunday night.
Earlier in the week, we discussed how Brexit headlines would cause volatility in GBP pairs. As it turns out, the last 2 days were full of volatility for GBP pairs.
Yesterday, UK Prime Minister Boris Johnson and EC President Ursula von der Leyen met in Brussels for dinner, as well as, to discuss Brexit. The outcome was not hopeful. Boris Johnson said it is “very, very likely” that there will be a no-deal Brexit. Talks are deadlocked. However, talks will continue through the weekend, which means there is still a chance that something will be done….perhaps a skinny Brexit deal? Watch for large gaps in GBP pairs on Monday!
GBP/USD has not lost hope yet! The pair has been trading in an upward sloping channel and formed a shooting star candlestick in December 4th at previous resistance near 1.3500 as it became less and less likely a Brexit deal would get done. GBP/USD began pulling back and today tested the bottom, upward sloping channel of the trendline, as well as the 50% retracement level from the September 23rd lows to the December 4th highs. The pair has now sold off nearly 400 pips in 6 trading sessions. Support is near todays lows at 1.3134 and then 1.3109. If price gaps open lower on Monday, longer term horizontal support is at 1.2670. If GBP/USD is bid on Monday morning, resistance is at the December 4th highs near 1.3541 and then the March 1st, 2018 lows just above 1.3700.
Source: Tradingview, City Index
EUR/GBP has been shot out of a rocket! The pair has been forming a symmetrical triangle since mid-March, and more recently, had been trading in a downward sloping channel, within the triangle, to the 61.8% Fibonacci retracement level from the March 19th highs to the April 30th lows. EUR/GBP posted a false breakdown below the triangle and traded back into it on December 2nd, while also breaking out of the top of the downward sloping channel near 0.9000. Today, the pair moved broke out of the top of the triangle near 0.9200. If the GBP is lower on the Monday open, resistance above in EUR/GBP is at the December 11th highs near .9293. The March 19th highs are near 0.9500. If GBP is stronger on the Monday open, there is strong horizontal support near 0.8875. Below there are the April 30th lows near 0.8670.
Source: Tradingview, City Index
Boris Johnson set the new deadline for to a trade deal to be done on Sunday night. If there is no deal, watch for GBP pairs to gap lower on the reopen after the weekend. If there is a deal, or at least a deal in principle, watch for the Pound to gap open higher on the reopen. Traders should make sure to use proper risk/reward over the weekend if trading GBP pairs.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.