British Pound: USD/GBP (GBP=X) trading lower in mid-week trade amidst speculation Prime Minister Theresa May could be forced out of office over coming days
The Pound is trading lower in mid-week trade amidst speculation Prime Minister Theresa May could be forced out of office over coming days.
Reports suggest senior Cabinet ministers are looking to call on the Prime Minister to resign as soon as possible, as it becomes clear there is virtually no support for her new Brexit deal to pass through Parliament.
“Rumours – not yet confirmed, but equally not being denied – of a move against PM by cabinet today. Source says it’s looking likely,” reports ITV’s Paul Brand.
The Evening Standard reports Cabinet ministers were this afternoon discussing sending a delegation to tell Theresa May she should resign after botching her “last chance” at a Brexit deal.
It is said at least four ministers were said to be in talks about calling time on the Prime Minister after her attempt to get cross-party backing for a new plan hit a wall of opposition.
“What could be viewed as best from a sentiment perspective and for the Pound, would be for PM May to resign now and not waste the next two weeks on a deal that stands next to no chance of passing,” says Derek Halpenny, a foreign exchange analyst at MUFG in London. “If May continues to pursue this deal and with ample scope for the market to re-price no-deal risks later this year and general election risks, we see scope for further GBP declines from here over the short-term.”
The declines in the Pound extend a negative trend that has been in place through the course of May and we hear today the currency is at risk of further steep losses during the summer months.
The forecast that further declines in the currency are likely come from a number of foreign exchange analysts who are today responding to the recent flaring of domestic political uncertainty and growing market fears of a ‘no deal’ Brexit on October 31 which was accentuated by the political reaction to Prime Minister Theresa May’s latest ‘new deal’ offer to parlament.
May said Tuesday that she’ll put her EU Withdrawal Agreement Bill (WAB) before parliament again in the week of June 03, but this time around it’ll include overtures to the opposition Labour Party in an attempt to form a cross-party consensus in Parliament.
Amongst the overtures are a Parliamentary vote on whether a confirmatory referendum on her deal should be held if it is passed.
MPs in the House of Commons will also be given an opportunity to dictate the kind of future customs relationship the country seeks to have with the EU following a scheduled October 31 exit.
Sterling initially rallied on news of a potential referendum, however, the scale of the opposition to the ‘new deal’ was soon revealed to be sizeable.
Sterling relinquished its gains: the Pound-to-Euro exchange rate rallied to a best of 1.1455 before paring those gains to quote at 1.1398 mid-week. The Pound-to-Dollar exchange rate went as high as 1.2756 before retreating back to 1.2714.
“As the new Brexit deadline approaches, we think that investors will rebuild short positions in Sterling, putting renewed downward pressure on the currency,” says Jonas Goltermann at Capital Economics.
Overall, the bias in prices is: Downwards.
By the way, prices are vulnerable to a correction towards 1.29.
The projected upper bound is: 1.28.
The projected lower bound is: 1.25.
The projected closing price is: 1.26.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 1 white candles and 9 black candles for a net of 8 black candles. During the past 50 bars, there have been 18 white candles and 32 black candles for a net of 14 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.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
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 14.0507. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 13 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 25.67. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 60 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 -110.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 12 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 8 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed down -0.001 at 1.265. Volume was 98% below average (consolidating) and Bollinger Bands were 51% wider than normal.
Open High Low Close Volume___
1.266 1.267 1.264 1.265 4,086
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.28 1.30 1.30
Volatility: 4 7 10
Volume: 119,907 155,770 175,206
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 2.3% below its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. 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 6 periods. Our momentum oscillator is currently indicating that GBP= is currently in an oversold condition.
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