GBP brushed aside Brexit doomsday warning

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GBP brushed aside Brexit Doomsday Warning, bull could hold a higher ground ahead of G20 summit

  • The GBP has turned a blind eye to the Brexit doomsday warning made by BoE, as it is holding a tight range just below 1.2800.
  • UK PM still 7 votes behind passing her Brexit deal in the British Parliament due to be held on December 10th
  • Despite central banks warning, GBP had shown positive resilience
  • Triggered by a dovish FED comment, market sentiment improves and GBP and EUR both are looking forward to a bullish bias

Yesterday, the Bank of England comes in with a various form of Brexit outlook and shocks expected as a Brexit doomsday. The BoE statement concluded with many doom and gloom warning regarding the Brexit draft. Alongside, BoE, the US president Donald Trump also commented that the recent Brexit deal would interfere their business relationship with UK. Amidst, all of these tempestuous breakthroughs, the GBP has been holding a tight range just below 1.2800 and the outlook appears to be quite positive, ahead of G20 summit.

Bank of England GBP/USD data (1975-2018)

Bank of England GBP/USD data (1975-2018)

GBP/USD daily chart

GBP/USD daily chart

In the Asia Pacific trading session today, GBP has failed to hold on to its bullish momentum gained yesterday and it again slipped in to the 1.2700s. However, while this report is being written, GBP has been traded in a tight range and the outlook remain strong, as it is approaching towards the 1.2800s.

While GBP is strengthening its position around the 1.2800 region, the EUR is looking forward to reach the 1.1400 mark, residing at 1.1391

Bottom Line

Although, the IG client sentiment showed, trades of GBP/USD are 72.6% net long, emerging a bearish momentum (while following the contrarian view), the market outlook remains stronger for GBP. At this moment, the GBP is trading at 1.2795, robustly moving ahead, pushing aside the Brexit concerns and Trump’s comment regarding US-UK business relationship. The key support level of GBP resides at 1.2662, however that is unlikely to happen after experiencing a dovish FED comment yesterday. Its critical resistance level is lying on 1.2890, and if it is broken, GBP could be eyeing 1.3145 (two-month high), ahead of G20 summit.

Read more on Brexit 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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