GBPJPY & GBPUSD, H1
The Sterling outperforms, presently showing an average 0.3% gain versus the Dollar, Euro and Yen. Only the Australian Dollar is stronger today out of the currencies we keep tabs on. The reason is that the British government, after more than two years since the vote-to-leave the EU, finally worked out what it wants from a post-Brexit deal with the Union, hammered out in a climactic Cabinet meeting on Friday, which saw the hard Brexiteers giving up ground to reach a compromise.
The government will seek a “EU-UK free trade area which establishes a common rule book for industrial goods and agricultural products,” which essentially means a single market for goods, along with a “facilitated customs arrangement” to address the need for a frictionless border in Ireland. Sterling rallied at the open of trading in Asia-Pacific, but subsequently gave up ground as markets reacted to the news that the Brexit Secretary, David Davis, resigned. It also remains doubtful that the EU will agree to the free market for goods, having maintained that the UK will not be able to cherry pick which parts of the single market to take part in. It also remains uncertain how effective the proposed frictionless customs arrangement will be. There are now only five negotiating weeks left until October, when both the EU and UK are looking to have an agreement in place.
Overall, although the soft Brexit approach by the government is in theory bullish for the Pound, the Sterling is anticipated to retain a Brexit-related discount, which we estimate to be around 10-12%, due to the enduring uncertainties.
Meanwhile today, the Cable and GBPJPY lifted to 3-week highs at 1.3362 and 147.56 respectively, while EURGBP dipped to two-session low of 0.8813. Currently, the Pound presents intraday weakness against the US Dollar and Yen as noticed in the hourly chart. However only a break below R1 in both asset could suggest a correction lower to PP level within the day. Such potential movements could be considered simply as corrections of the sharp rally seen the last 7 consecutive days as long as the price remains above 20-Day MA.
GBPUSD:
Resistance Levels: 1.3315, 1.3345, 1.3400
Support Levels: 1.3260, 1.3230, 1.3170
GBPJPY:
Resistance Levels: 147.00, 147.25, 147.75
Support levels: 146.55, 146.30, 146.80
Click here to access the HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! The next webinar will start in:
[ujicountdown id=”Next Webinar” expire=”2018/07/10 14:00″ hide=”true” url=”” subscr=”” recurring=”” rectype=”second” repeats=””]
Andria Pichidi
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
