No-deal Brexit is getting more likely by the minute. The UK Prime Minister Boris Johnson now says that Brexit deal never made any sense. Instead, he wants to keep the UK free from European Union state aid regulations. His belief is that the UK can create a fourth industrial revolution by investing taxpayer money to companies producing artificial intelligence-based solutions. EU rules would not allow the UK to do this. If this is not negotiation tactics but he insists on following through with this plan, this will mean volatile times are ahead for the pound. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.

No-deal Brexit news has pushed the GBPUSD rate below last week’s low. This together with the last weekly candle signalling loss of upside momentum is a technical confirmation that the markets are taking the UK prime minister’s words seriously. Next weekly confluence support can be found at 1.2982 where a weekly low and a 10-period SMA coincide.

There is also a Fibonacci cluster (1.2994 to 1.3013) which suggests this level is quite significant is highly likely to give a bounce to GBPUSD should the level be tested. There is another support though slightly higher at 1.3050 that bears needs to tackle first. The pound is getting relatively close to the lower end of its recent range but is still moving lower at the time of writing this. To take advantage of our ultra-low trading fees, register for an account and deposit here.

The pair is trending lower in a channel and has rejected rally attempts above the 1.3174 resistance. 1.3159 to 1.3174 area is a likely intraday resistance day traders are focusing on. Next minor support level is at 1.3115.

Conclusion: Weekly bearish signals together with no-deal Brexit talk GBPUSD is likely to move lower. Also, the 4h chart shows a clear downtrend with resistance fairly close by. At the same time, it’s worth noticing that Cable is getting closer to the lower end of its six-week range. Based on the current technical picture and no-deal Brexit scenario hanging in the air, we believe it likely that rallies are sold and therefore look for sell signals at resistance levels below 1.3194. Should the UK Prime Minister’s rhetoric change and/or there would be a clear change in the technical picture (resistance violated or market extending to above mentioned supports) then we’d be considering also short term longs. To see my Daily Market Commentary video go our YouTube channel here.

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Recent macroeconomic data releases

  • US Unemployment Claims 881K (955K expected)
  • US ISM Non-Manufacturing PMI 56.9 (57.0 expected)
  • Canadian Employment Change 245.8K (262.5K expected)
  • Canadian Unemployment Rate 10.2% (10.1% expected)
  • US Average Hourly Earnings 0.4% (0.0% expected)
  • US Non-Farm Employment Change 1371K (1385K expected)
  • US Unemployment Rate 8.4% (9.8% expected)
  • Swiss Foreign Currency Reserves 848B

Macroeconomic data releases today & tomorrow

  • Australian NAB Business Confidence
  • BOC Overnight Rate 0.25% expected
  • BOC Rate Statement

You may access the times and dates in the economic calendar here.

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Janne Muta
Chief Market Analyst

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Janne Muta

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