British Pound: USD/GBP (GBP=X) Path of least resistance for Sterling is higher
The Labour Party have announced that if they cannot get a ‘Labour Brexit’ through the House of Commons, they’ll move to a promise of another referendum on Brexit, a move that has been interpreted by foreign exchange markets as being a positive one for Pound Sterling.
The announcement has been snatched upon as a u-turn by the Labour Party into supporting a second referendum on Brexit, as it is apparent there is nil chance of a ‘Labour Brexit’ getting through the House of Commons: the Labour Party do not control the parliamentary agenda and nor does the government of Theresa May appear serious in accepting the opposition party’s vision of joining the EU Customs Union.
The move, while appealing to Labour’s membership, could however pit the party against its core leave-supporting voters, particularly in Northern constituencies.
There are now two scenarios for Sterling says Patel:
1. The Brexit deal: Initial move to 1.32-1.33 but then faded
2. A 2nd referendum (markets price in 50% remain odds): 1.34-1.35
However, some analysts are saying the real new for Sterling is not the Labour Party’s shift in stance, rather media reports that Prime Minister May is looking to delay Brexit, suggesting the prospect of a ‘no deal’ Brexit is looking more remote by the day, and this should guard Sterling against any material downside.
Prime Minister May is due to meet her cabinet where the prospect of a delay to Brexit will be discussed. “The length of the delay is not known at this stage. If the media reports are true – and this is not guaranteed – PM May is proposing to make a big change in policy,” says Joseph Capurso, a foreign exchange strategist with CBA. “The potential for increased GBP volatility is high in the next two days.”
CBA think GBP can lift by 2% “in a ‘knee jerk’ reaction if Brexit is delayed”.
Discussions at Tuesday’s cabinet meeting could also extend to the prospect of offering MPs a binding vote to take a ‘no deal’ off the table suggests Patel.
Also today, May will make a statement to Parliament about the next steps for Brexit, while presenting a motion for voting on Wednesday evening.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 1.33.
The projected lower bound is: 1.29.
The projected closing price is: 1.31.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 3 black candles for a net of 3 white candles. During the past 50 bars, there have been 26 white candles and 23 black candles for a net of 3 white candles.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
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 84.5047. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 8 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 63.19. 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 sell 21 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 128.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 2 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 buy 4 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed up 0.003 at 1.313. Volume was 75% below average (consolidating) and Bollinger Bands were 9% narrower than normal.
Open High Low Close Volume___
1.309 1.315 1.309 1.313 45,865
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1.30 1.29 1.30
Volatility: 8 9 10
Volume: 151,425 162,889 177,808
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 1.1% above its 200-period moving average and is in an upward 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 bullish on GBP= and have had this outlook for the last 1 periods.
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