British Pound Outlook Hinges on Brexit Progress Forward of Key Deadline

HomeForex News

British Pound Outlook Hinges on Brexit Progress Forward of Key Deadline

British Pound, GBP/USD, Brexit, IG Shopper Sentiment – Speaking Factors:Fairness markets continued to push larger throughout APAC


British Pound, GBP/USD, Brexit, IG Shopper Sentiment – Speaking Factors:

  • Fairness markets continued to push larger throughout APAC commerce.
  • Lack of progress in Brexit negotiations could weigh on the British Pound.
  • GBP/USD struggling to penetrate key resistance. Is a reversal decrease within the offing?

Asia-Pacific Recap

Equities markets broadly moved larger throughout Asia-Pacific commerce, with the Nikkei 225 persevering with its push to 30-year highs, climbing 0.91%.

Australia’s ASX 200 index slipped 0.7%, after the Chinese language Overseas Ministry introduced that some Australian coal imports had failed to fulfill regulatory requirements.

In FX markets, the cyclically-sensitive AUD and NZD nudged marginally larger whereas the haven-associated US Greenback continued its slide decrease.

Gold and silver costs clawed again misplaced floor whereas US 10-year Treasury yields slid decrease.

Trying forward, Mexican third-quarter GDP figures and the European Central Financial institution’s assembly minutes headline the financial docket.

British Pound Outlook Hinges on Brexit Progress Ahead of Key Deadline

DailyFX Financial Calendar

Brexit Talks to Weigh on GBP

The strict warning from the European Union’s chief negotiator to his British counterpart may undermine the politically-sensitive GBP within the close to time period.

Michel Barnier has reportedly warned UK chief negotiator David Frost that the EU will pull out of Brexit negotiations inside 48 hours, if the UK fails to compromise on a number of key points.

After all, this can be simply one other political transfer to place strain on Prime Minister Boris Johnson and his authorities. In spite of everything, failure to ratify a Free Commerce Settlement (FTA) could be detrimental to all events concerned.

Brexit Timeline

British Pound Outlook Hinges on Brexit Progress Ahead of Key Deadline

Supply – UK Home of Commons

Nonetheless, with European Fee President Ursula von der Leyen stating that “there are nonetheless three points that may make the distinction between a deal and no deal” and the December 31 deadline quick approaching, the UK could but tumble out of Europe and not using a ratified commerce settlement.

That being stated, von der Leyen reiterated that “we’ll do all in our energy to succeed in an settlement [and] we’re able to be artistic”.

Nonetheless, the dearth of any significant progress could start to gnaw at regional traders’ sentiment and weigh on the British Pound towards its main counterparts.

GBP/USD Each day Chart – Yearly Excessive Inside Attain

British Pound Outlook Hinges on Brexit Progress Ahead of Key Deadline

GBP/USD every day chart created utilizing Tradingview

GBP/USD charges are eyeing a push to problem the yearly excessive (1.3483), after breaching psychological resistance at 1.3300 and the 78.6% Fibonacci (1.3310).

Nonetheless, with the MACD histogram notably plateauing and the RSI struggling to push above 70, a reversal decrease seems within the offing.

Failure to realize a agency foothold above 1.34 on a every day shut foundation would most likely ignite a pullback in direction of the November 11 excessive (1.3314), with a break under brining the March excessive (1.3200) into play.

Conversely, clearing the September three excessive (1.3403) would possible open the door for costs to probe the yearly excessive (1.3483).

GBP/USD 4-Hour Chart – Rising Wedge Hints at Impending Reversal

British Pound Outlook Hinges on Brexit Progress Ahead of Key Deadline

GBP/USD 4-hour chart created utilizing Tradingview

Zooming right into a four-hour chart bolsters the bearish outlook depicted on the every day timeframe, as value carves out a bearish Rising Wedge reversal sample.

Important bearish RSI divergence is indicative of fading bullish momentum and will encourage would-be sellers if the 88.6% Fibonacci (1.3391) continues to stifle shopping for strain.

Breaching the 78.6% Fibonacci (1.3310) might be required to validate the bearish sample and propel value again in direction of the March excessive (1.3200).

Alternatively, pushing above psychological resistance at 1.3400 would possible neutralize near-term promoting strain and produce the resistance vary at 1.3470 – 1.3480 into play.

British Pound Outlook Hinges on Brexit Progress Ahead of Key Deadline

The IG Shopper Sentiment report exhibits solely 30.69% of merchants are web lengthy GBP/USD, with the ratio of merchants brief to lengthy standing at 2.67 to 1. The variety of merchants net-long is 6.76% decrease than yesterday and 1.65% decrease from final week, whereas the variety of merchants net-short is 17.38% larger than yesterday and 18.74% larger from final week.

We sometimes take a contrarian view to crowd sentiment, and the actual fact merchants are net-short suggests GBP/USD costs could proceed to rise.

Having stated that, excessive brief positioning (>70%) appears to have coincided with a flip decrease within the trade price a number of occasions since GBP/USD set the yearly excessive, suggesting a near-term reversal may very well be on the playing cards.

— Written by Daniel Moss, Analyst for DailyFX

Comply with me on Twitter @DanielGMoss

How to Use IG Client Sentiment in Your Trading

How to Use IG Client Sentiment in Your Trading

Really helpful by Daniel Moss

Enhance your buying and selling with IG Shopper Sentiment Knowledge





www.dailyfx.com