The Brexit negotiation has heated up after Donald Tusk’s recent comments. But that was a political distraction. The real concern is about the UK economy that is sailing into the Brexit vortex.
On GBPUSD, the rate has weakened from the 1.3200 resistance. I have commented last Monday (see here) that ‘near-term weakness‘ is possible. Indeed. Prices not only failed to break the prior pivot highs, they have regressed beneath the key 1.300 support. The long-term trend indicator as measured by the 150-day moving average is also crossed below (see Featured Chart).
What’s next? Given the messy Brexit process, GBPUSD’s directional risk is skewed to the downside. Its near-term support is at 1.280, which may be tested soon. Throwing more volatility into the rate is the Bank of England monetary meeting today. The central bank may reserve its firepower until the Brexit day.
For GBPEUR, the rate has failed (again!) to break above the range resistance at 1.15 (see below). The near-term support is at 1.130
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Jackson has over 10 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world largest institutions and hedge funds.
Expertise: Global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University.