The Boris Johnson Effect may be Fading

EUR/GBP will be highly sensitive to Brexit headlines over the next few months

UK Prime Minister Boris Johnson came into office with hopes that he was going to be the one who would negotiate a Brexit deal, as former UK Prime Minster Teresa May ran into a brick wall. GBP responded favorably, as EURGBP pulled back for the first week in 13 weeks! If he can’t, then the UK would leave the European Union and there would be a Hard Brexit.  Pages can be written on what a Hard Brexit means.   In general, it means that the UK won’t be afforded ANY of the benefits that it currently receives from being a member of the EU, such as free trade.  Johnson is hoping to negotiate some of these benefits in favor of the UK before the official Brexit deadline on October 31st, 2019.   After only a few weeks in office though, it seems a Hard Brexit is becoming more and more of a possibility. Recently, officials from the EU and member countries have commented that they are preparing for a Hard Brexit. 

Focusing on EUR/GBP, if the headlines continue to suggest we will have a hard Brexit, then EUR/GBP will may continue higher.   Resistance comes in at recent highs around 0.9325, as the RSI has unwound from overbought levels.  Support is the recent double bottom and old support at 0.9090, and then the 61.8% retracement level from the July 25th low to the August 12th high.  Horizontal support also comes in around this level. 

Source: Tradingview, City Index

EUR/GBP will be highly sensitive to Brexit headlines over the next few months.   Watch for whipsaw price action when trading the pair.

Disclaimer

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.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX 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), StoneX Financial 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 StoneX Financial 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 StoneX Financial 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.

StoneX Financial 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.