Earlier today, various officials have stated that the UK and the European Union are closing in a Brexit deal and even that a draft treaty could be published as early as Wednesday. However, later in the day, other officials tried to throw cold water on the euphoria that took over the markets by warning that even if negotiators do reach an agreement, Brexit will need to be delayed passed the “official” deadline of October 31st. But the timing of Brexit isn’t the story. The story is that negotiators are making progress and based on current statements from major players, progress is being made and a Brexit deal is in the works.
If it truly is the case, Sterling should continue to move higher, with GBP/USD already up almost 1.5% on the day. On a long-term time-frame (weekly), the pair closed above the downward sloping trendline from early in 2018 and the 50% Fibonacci retracement level from the high of the week of March 11th to the low of the week of September 2nd. However, the pair is about to run into a large confluence of resistance just above:
1) Horizontal resistance at 1.2865 from the weekly low in April
2) The 61.8% Fibonacci retracement from the high of the week of March 11th to the low of the week of September 2nd at 1.2837
3) The 38.2% Fibonacci retracement from the high of the week of April 16th to the low of the week of September 2nd at 1.2880.
Source: Tradingview, City Index
If price breaks through 1.2900, above is horizontal resistance and the psychological resistance level of 1.3000. However, if GBP/USD breaks through 1.3000, there is only minor resistance on the way up to 1.3400!
Tomorrow the UK releases a host of inflation data. However, they should all be a side show to any ongoing Brexit negotiations and headlines.
From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.