GBPUSD Targets 130 Ahead Of BoE Brexit
The second half of this weeks sees the BoE monetary policy announcement and the date that the UK leaves the EU.
Following Boris Johnson’s Brexit Bill’s rapid passing through UK Parliament, the EU Parliament will vote on the bill tomorrow, no surprises are expected. The UK will leave the EU on Friday 31st January. The focus will then shift firmly onto difficult trade talks between the UK and EU. The two sides will have until the end of the year to hammer out a trade deal. Failure to reach an agreement means the UK will endure a hard, no deal Brexit.
Data has been mixed. Retail sales earlier in the month disappointed, whilst more recently labour market data and PMI’s surprised to the upside, making traders scale back their expectations of a rate cut. The market is pricing in a 50 / 50 probability of rates being slashed on Thursday.
With a 50% chance of a rate cut from BoE coupled with fears of a no deal Brexit the pound is under pressure.
The safe haven dollar has found support amid growing concerns over the spread of China’s deadly coronavirus and the potential economic impact of the outbreak on global growth and trade.
With no UK macroeconomic data due today, attention will move to US durable goods orders later today. Expectations are for a rebound in durable goods, increasing 0.9% in December, up from -2.1% decline in November.
Levels to watch:
A move through the 50 sma this morning has triggered further selling. GBP/USD is testing trend line support. A meaningful break through here and through immediate support at the kept $1.30 psychological level could open the door to support at $1.2950 prior to December low of $1.29.
On the upside a move above $1.3050 could negate the current bearish bias, before an attempt on $1.3150, $1.3170 and $1.3212 (Jan 6th high)
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
For further details see our full non-independent research disclaimer and quarterly summary.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.
City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.
City Index is a trademark of StoneX Financial Ltd.
The information on this website 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.
© City Index 2024