Upbeat Brexit News Pushed Pound Higher
Dear Traders,
Monday’s best performer was the British pound which received a boost from U.K. Prime Minister Theresa May who announced that they are close to an agreement on a Brexit transition. The upbeat news pushed the pound to a high of 1.3877 against the dollar. We now expect the pound to test the 1.39-level before potential pullbacks occur. As long as GBP/USD trades above 1.38, chances are in favor of the bulls.
Unlike the cable, there was little movement in the EUR/USD with the euro trading resiliently above 1.23. The Italian election did not result in a clear majority but market participants took a hung parliament as a more favorable outcome than having the Eurosceptic Five Star Movement hold a majority. We still wait for a clear break above 1.2370, and furthermore, a sustained break of 1.24 in order to anticipate further bullish momentum.
There are no major economic reports scheduled for release today, so the price action will hinge on investors’ risk appetite for euros and pounds.
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