The British pound fell like a stone Monday after warnings Brexit talks could fail. For several weeks the market was optimistic that a deal between the U.K. and EU would be reached in order to avoid a ‘hard Brexit’- the worst-case scenario. Talks are at a critical stage and both sides have said they are far apart on key issues. U.K. Prime Minister Boris Johnson headed to Brussels yesterday for urgent talks with European Commission President Ursula von der Leyen to try and get a deal done.
GBP/USD slid to a low of 1.3224 before it recovered losses and consolidated between 1.34 and 1.33. Bulls in this pair should now watch out for a sustained break above 1.34 which could send the pair back towards 1.35 in a first stage – provided that there will be a break of deadlocked negotiations. Bears, on the other side, could wait for prices below 1.3280 to sell sterling towards 1.32.
Euro bulls took a breather Monday and EUR/USD recorded a small setback, sending the single currency below 1.21. The decline was however short-lived and the pair was able to hold above 1.21 (for now). We now expect the euro to trade between 1.2150 and 1.2060-40.
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We are long at 1.2125
Short @ 1.2080
We wish you good trades!
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