British Pound: USD/GBP (GBP=X) on defensive after latest Irish border proposals
The Pound was on the defensive Wednesday as Prime Minister Boris Johnson’s latest Brexit proposals were reportedly criticised in Brussels and after the Conservative Party leader told grassroots supporters that the plan was a “final offer” that must now be met with compromise from the EU.
Prime Minister Johnson told the party faithful Wednesday that proposals made to European capitals earlier this week are a “final offer” from the UK and that the EU must now compromise on its own demand that the ‘integrity of the single market’ not be threatened by any exit agreement with the UK. The implication is the UK could now more likely be headed for either a divisive and damaging Article 50 extension that faciliates a risky general election, or a ‘no deal’ Brexit that would clobber the Pound.
The open border on the island of Ireland that’s required by the Good Friday Agreement would amount to a backdoor into both the EU and UK single markets in the absence of matching regulatory regimes, although some in the ‘leave’ camp insist that such threats can be addressed with technology and adapted versions of systems that are already in place. But the EU has rejected all of the proposals put to it so far and the clock is now ticking down to October 31 and the expiry of the current Article 50 extension period.
“We doubt PM Johnson can reach a deal with the EU that can win over a majority of MPs in the fragmented UK House of Commons. If Johnson can’t reach a Brexit deal by 19 October, the Brexit date will likely be delayed from 31 October 2019 to 31 January 2020 and early general elections would probably take in place in November. While the risk of a hard‑Brexit end‑October is low, it cannot be ruled‑out and this remains an important drag for GBP,” says Elias Haddad, a strategist at Commonwealth Bank of Australia.
In a heavily Brexit-focused speech to the Conservative Party conference Wednesday, the Prime Minister claimed that voters have more sway over the outcome of so-called reality television programs than they do the actions of the current parliament, which he accused of wanting neither Brexit, an election nor to do anything else “constructive”. But most notably for markets, Johnson stuck to his guns that the UK will leave the EU on October 31 “with or without a deal”, despite parliament legislating against that.
Some in the market have quietly feared that Johnson has a trick up his sleave that will enable the government to circumvent the so-called Benn Act, which the Prime Minister referred to as simply a “bill” on Wednesday. The act of law made in parliament last month, with the aid of a partisan Speaker of the House of Commons and 21 now-former Conservative MPs, requires Johnson to seek an extension to Article 50 by October 19 if he hasn’t secured a deal with the EU.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 1.25.
The projected lower bound is: 1.21.
The projected closing price is: 1.23.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 2 white candles and 8 black candles for a net of 6 black candles. During the past 50 bars, there have been 22 white candles and 28 black candles for a net of 6 black candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 46.3055. This is not an overbought or oversold reading. The last signal was a buy 1 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 46.79. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 35 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -78. This is not a topping or bottoming area. The last signal was a buy 0 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 6 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed down -0.000 at 1.230. Volume was 99% below average (consolidating) and Bollinger Bands were 12% narrower than normal.
Open High Low Close Volume___
1.230 1.232 1.229 1.230 716
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.24 1.23 1.27
Volatility: 8 10 9
Volume: 98,351 115,740 143,484
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX GBP= is currently 3.4% below its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of GBP= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on GBP= and have had this outlook for the last 0 periods.