Pound Sterling six-month high on Brexit delay

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GBP, EUR, USD/JPY and Brexit trending points

  • Pound remarkably outperformed on Tuesday’s (the 26thof February), as it breaks a 19-week high above 1.32 and hovering closer to its next critical resistance level at 1.3294 (July, 2018 high)
  • EUR/GBP pair edges towards its lowest level since May, 2017, as Brexit risks evaporated
  • While PM May has been considering a delay in Brexit vote, the opposition Labour Party told yesterday (the 25thof February) that they would support a second Brexit referendum if current Brexit amendment gets rejected in the UK house of Common
  • American dollar loses grip over the accelerator, as its falls below 95.50 against a basket of 6 major currencies, while further falls are likely as Fed Chair would likely to sustain on his patient stance on today’s (February 26th) speech.
  • As Chinese Yuan breaches 7-month high, the Aussies also extended gain in the European session, as it is residing closely below its psychological resistance level at 0.72

Pound Sterling may surge further, as no-deal risk continues to recess

On Tuesday, the 26thof February, the Pound Sterling has been the most upbeat currency, as it breaches a 19-week high and currently on route to break its next resistance level at 1.3294 July, 2018 high. While this report is being prepared, the pound sterling gains more than 1.20 percent to 1.3260 after failed to break its next resistance level at 1.3294 in the midday European trading session.

GBP/USD daily price chart

GBP/USD daily price chart

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The EUR/GBP pair was down to its lowest level since May, 2017, as a no-deal Brexit risk completely evaporates.

EUR/GBP daily price chart

EUR/GBP daily price chart

Overnight, Brexit headlines stated that the UK PM May had been vying to delay the Brexit vote and the Conservative lawmakers appeared to be succeeding on manipulating others to assess the risk of a no-deal Brexit, as opposition Labour party had agreed to back a second Brexit referendum, if the current deal failed to pass through the UK House of Commons. Here is the dates of Brexit votes announced by UK PM Theresa May.

  • 12thof March- 2ndMeaningful Vote
  • 13thof March: Vote on no-deal if the first vote fails
  • 14thof March: Vote on the extension of Article 50, if both votes fail

Looking ahead, it appears that the risk of a no-deal Brexit has been evaded and pound sterling upsurge may continue, and a daily closure above its next resistance level at 1.3294, would pave the way to break 1.3365-1.3410 level.

Besides, the USD/JPY failed to break above its 200-day moving average at 111.00 hurdle, as it was trading at a tight range ahead of another dovish speech from Fed chair. Apart from that, the Australian dollar gains further, as it is closing in to break above 0.72, and a daily closure above 0.7210 level could jolt the Australian Dollar higher above 0.7270-0.7290 level, matching the gains of its psychological mirror Chinese Yuan, which posted a 7-month high yesterday.

AUD/USD daily price chart

AUD/USD daily price chart

Bottom Line

American dollar falls below its initial support level at 95.50 and further falls appear to be upcoming, following another likely-to-be dovish speech from Fed Chair, as Powell seems to be unchanged of his dovish stance despite a solid US economic outlook.

Over the UK soil, a fresh air of Brexit optimism has been breezing through and GBP alongside euro may test 1.33 and 1.14 level respectively, as a no-deal Brexit risk has entirely been evaporated.

Pound sterling and euro would likely to surge ahead of Brexit votes between March 12th-14th, over fresh optimism of UK divorcing EU with some kind of deal and trade talk optimism would likely to fuel up the investors’ confidence further.

Read more on British Pound here

[Disclaimer: The content of this article is personal opinion and should not be considered as investment advice or suggestion towards any trading activity.]

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