Pound Tumbles Again on Brexit Uncertainty, RBA Leaves Rates Unchanged

Pound Falls Off the Cliff on Political Turmoil

The pound tumbled against all the other G10 currencies yesterday. It fell the most against USD, NOK and JPY in that order, while it underperformed the least versus AUD, EUR and NZD.

GBP/CHF — Technical Outlook

GBP/CHF continues to trade below its medium-term downside resistance line taken from the high of May 28 th. Recently, the pair was spotted moving sideways, roughly between the 1.1935 and 1.2080 levels. At the time of writing, it is balancing just slightly above the lower side of that range. Although there is a chance for the rate to move further south, given the events that are planned for today in the British Parliament, we will take a more cautious approach and monitor some of our key support and resistance levels instead.

RBA Stands Pat, Maintains the “if needed” Language

Flying from the UK to Australia, a few hours ago, the RBA announced its monetary policy decision. The Bank decided to keep interest rates unchanged at the record low of +1.00% as was broadly anticipated, and reiterated that they will continue to monitor developments, including in the labour market, and ease monetary policy further “if needed”.

AUD/USD — Technical Outlook

Once again, after finding good support near the 0.6689 hurdle, AUD/USD is trying to get back up. This morning we are seeing a strong rebound from that hurdle, which may give some hope for the bulls to lift the rate a bit higher. That said, the pair has some strong obstacles on its way higher, one of which is the short-term downside resistance line taken from the high of August 8 th. For now, there is a chance to see AUD/USD climbing back up a bit, but as long as it stays below the aforementioned downside line, we will stay somewhat bearish over the near term.

As for the Rest of Today’s Events

During the European day, we get the UK construction PMI for August, which is anticipated to have risen to 45.9 from 45.3. However, bearing in mind that the manufacturing index, released yesterday slid to 47.4 from 48.0, instead of rising to 48.4 as the consensus suggested, we see the risks surrounding the construction forecast as tilted to the downside. In any case, we expect UK data to pass unnoticed this week, as investors keep their gaze locked on developments surrounding the political landscape.

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