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The Rise And Fall Of The Pound Amidst Political Turmoil

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Dear Traders,

The biggest story on Monday was the rise and fall of the British pound which were due to political headlines. After Davis’ resignation, Boris Johnson and Steve Baker followed, who did not support Theresa May’s less aggressive so-called ‘soft Brexit’ approach. This throws the stability of the U.K. government into question. Any signs that Brexit negotiations could be delayed due to political uncertainties, could increase the pressure on the pound.

GBP/USD: The pound rose to a high of 1.3363 before the sharp decline happened that sent sterling back towards a test of 1.32. A significant break below 1.32 could spur bearish momentum towards 1.3150 and 1.31. For bullish momentum to resume we would need to see a sustained break above 1.3320.

The euro reversed shy off 1.18 but found some short-term support at 1.1730. ECB President Mario Draghi reiterated his warning that trade wars pose the greatest risk to growth and stability. From a technical perspective, we will keep tabs on a break below 1.17 as long as the euro proves unable to overcome the 1.18-hurdle.

Today, traders will watch first monthly estimate of the U.K. GDP at 8:30 UTC. From the eurozone we have the ZEW Surveys due at 9:00 UTC.

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British Pound Experiences Roller Coaster Ride On Soft Brexit Speculation

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Dear Traders,

The biggest story in the market on Thursday was the British pound which experienced a roller coaster ride. The GBP/USD initially dropped to a low of 1.3121 from where a sharp reversal started, quickly pushing the pound towards 1.33. The reason for the sharp price rise was a report, saying that Europe’s top negotiator may offer the U.K. a two-year Brexit transition period to stay in the single market. Any signs in favor of a soft Brexit are generally positive for the pound, while a hard Brexit is seen as the worst scenario for the U.K. economy. Until only recently the official line had been that there was no major progress in the Brexit discussions.

While Brexit remains the main driver of the pound, traders should keep an eye on the technical picture. GBP/USD is still below 1.33 and once that hurdle is significantly taken out, we could see the pound further rising towards 1.3350 and 1.3450. Sterling bears should however wait for prices below 1.3150.

 

The euro traded range-bound between 1.1870 and 1.1825. ECB President Draghi’s speech failed to have an impact on the euro’s price action. We now expect the EUR/USD to trade between 1.1930 and 1.1830. Sellers should keep an eye on prices below 1.1780 that could lead to further losses towards 1.1730.

Most attention will be paid to the U.S. Consumer Price Report scheduled for release at 12:30 UTC today. Around the release time of this report we expect higher volatility in all USD crosses.

We wish you good trades and a wonderful weekend.

Daily Forex signals:

Additional daily and long-term entries are available for subscribers.

View our daily signal alerts https://www.maimar.co/category/daily-signals/

Subscribe to our daily signal service https://www.maimar.co/signals/

We wish you good trades and many pips!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2017 Maimar-FX.

www.maimar.co