Pound Volatile With Brexit Rumour Mill In Overdrive

0
10

After a frantic 24 hours the volatility remains high. The pound plummeted to monthly lows versus the and the dollar in the previous session, on rumours that Brexit talks were on the verge on collapse. Today the pound is rebounded versus the weaker dollar but has failed to hold onto those early gains.

Sterling spiked after the Times reported that the EU are willing to put a time limit on the Irish backstop. However, the spike was short lived after the DUP rejected the concession.

Whilst Prime Minister Boris Johnson has been playing the blame game with the EU, the PM has also made plans to meet with Irish PM Leo Varadkar at the end of the week. This is looking like a last-ditch attempt and is keeping the pound around $1.22 after yesterday’s very public spat with the EU.

Pound traders assuming an extension?

With three weeks to go until Brexit, the pound is hovering around $1.2200. At these levels there is a sense that Brexit is not going to happen, at lest not yet, regardless of Boris Johnson’s do or die rhetoric. According to Bloomberg a gauge for UK currency market sentiment for the next week is at the highest level for four months – is this because traders are assuming Boris Johnson will be forced to seek an extension?

Pound trades will continue to jump from headline to headline.

Trade & Fed for the dollar

On the other side of the equation expectations are low for the 13th round of US – Sino trade talk as actions from both sides suggest any truce could be a way off. The FOMC minutes are due later today, however we expect them to play second fiddle to trade talk headlines.

Levels to watch GDP/USD

Despite today’s spike, the pair trades below its 50, 100 and 200 SMA, with bearish momentum. Support can be seen at $1.22 prior to $1.2155. A break through here could see the pair drop towards $1.21.

On the upside, resistance can found at $1.2270, $1.2345 before $1.2390.

Levels To Watch GDP/USD

Levels To Watch GDP/USD

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.