Brexit Deal Wins, But Johnson’s Timetable Loses

Pound the Main Loser as UK MPs Reject Johnson’s Brexit Timetable

The British pound traded lower against all the other G10 currencies on Tuesday and during the Asian morning Wednesday. It underperformed the most against JPY, USD and CAD in that order, while it lost the least ground versus AUD and NZD.

GBP/AUD — Technical Outlook

On October 16 th, GBP/AUD managed to hit a new high for this year, at 1.9093, and after that, it started drifting slowly to the downside. The rate continues to move below a short-term downside resistance line drawn from that high and as long as the pair doesn’t violate that line, it could end up sliding a bit more in the near term. That said, overall, GBP/AUD is still above its medium-term upwards moving trendline drawn from the low of July 30 th, but had recently distanced itself quite bit from it. And also, there are some strong support levels, which the rate would need to overcome first, before moving slightly lower in the direction of the above-discussed upside line. This is why for now, we will remain neutral and wait for a break through one of our key levels, before examining a further directional move.

GBP/JPY — Technical Outlook

GBP/JPY also started drifting slightly to downside, after the pair hit its strong resistance near the 141.50 barrier. The rate fell below its 21 EMA on the 4-hour chart and seems to be willing to move a bit lower. That said, before the rate could move a bit lower, it would need to overcome a few strong support barriers. Also, let’s not forget that GBP/JPY is still trading above its short-term upside support line taken from the low of September 3 rd, so any pullback towards that line could still be classed as a temporary correction. From the short-term perspective, we will wait for a break of one of our key levels, before we may consider a further near-term directional move.

As for Today’s Events

The economic calendar is almost empty in terms of economic indicators. The only one worth mentioning is the EIA (Energy Information Administration) weekly report on crude oil inventories, which is expected to show a 2.232mn barrels increase, which is less than the previous 9.281mn. That said, bearing in mind that yesterday, the API report revealed a 4.450mn build, we would consider the risks surrounding the EIA forecast as tilted to the upside.

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