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  • The US Dollar seems to be back on the offensive against its major counterparts, pressuring EUR/USD and NZD/USD lower as USD/JPY consolidates. USD/CHF surges past key resistance. Get your market update from @ddubrovskyFX here:https://t.co/MrLGSp7FYa https://t.co/XS0176LyOg
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  • Google finance-related search interest in 'Evergrande' has almost overtaken 'Covid'. 'Taper' doesn't even register on the scale https://t.co/P6H9sHFVIB
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  • GBP/USD has flattened overnight after its strongest rally in a month on Thursday. The British currency has been under pressure recently as an energy crisis has caused a number of gas providers to go bankrupt. Get your market update from @HathornSabin here:https://t.co/3D8s2eIVWv https://t.co/JDGNwKYyOn
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  • Gold could suffer further near-term losses due to rising U.S. Treasury yields and a weak technical picture for price action. Get your weekly gold forecast from @DColmanFX here: https://t.co/g9QvH3L4It https://t.co/Vz98E0Bl9U
  • Gold has been trending lower after failing to clear resistance in the $1835 area earlier this month. Get your $XAUUSD market update from @DColmanFX here:https://t.co/3hm1g3BHgf https://t.co/MdTQKEBCBx
  • Key break here in the 10-year #Treasury yield as it rises to the highest since late June Took out 1.4230 resistance, and the 100-day SMA Eyes now on the 38.2% Fib extension at 1.4775 Also potential falling resistance from March https://t.co/4cI6l210ui
GBP/USD No-Deal Brexit Rally Lacks Momentum, AUD Eyes China Data

GBP/USD No-Deal Brexit Rally Lacks Momentum, AUD Eyes China Data

Daniel Dubrovsky, Strategist

Asia Pacific Market Open Talking Points

  • UK Parliament rejected a ‘no-deal’ Brexit, boosting market sentiment
  • Remarkable GBP/USD rally lacked momentum, resistance range held
  • AUD/USD may be torn between soft China data and rising Asia stocks

Build confidence in your own British Pound strategy with the help of our free guide!

Key FX Developments Wednesday

British Poundvolatility continued to be elevated as a series of Brexit-related votes in UK’s Parliament crossed the wires. On Wednesday, and by a thin margin of 4 votes, MPs rejected a ‘no-deal’ Brexit by favoring the ‘Spelman Amendment’. A subsequent vote to block a ‘no-deal’ by trying to take it permanently off the table then passed 321 to 278.

After Theresa May’s revised Brexit deal was rejected yesterday, increasing the odds of a ‘no-deal’ divorce, today’s round of voting seemed to be interpreted by the markets as decreasing the chances of the UK crashing out of the EU without any deal. Not surprisingly, the British Pound was the best-performing major currency by an overwhelming majority.

GBP/USD Technical Analysis

The 1.81% advance in GBP/USD on Wednesday was its most aggressive since April 2017, almost two years ago. On the daily chart below, Sterling is struggling to clear a range of resistances composed of the July and September 2018 highs between 1.3301 and 1.3363. Negative RSI divergence shows that upside momentum is fading and it may precede a turn lower.

GBP/USD Daily Chart

GBP/USD No-Deal Brexit Rally Lacks Momentum, AUD Eyes China Data

Chart Created in TradingView

Pronounced British Pound gains throughout Wednesday robbed most other major currencies from gains. In particular, the pro-risk Australian and New Zealand Dollars failed to capitalize on an improvement in sentiment as the S&P 500 trimmed its losses from last week. This is despite losses in Asia stocks earlier in the day. The uptick in market mood seemed to be supported by US durable goods surprising to the upside.

Thursday’s Asia Pacific Trading Session

AUD/USD will be eyeing Chinese industrial production and retail sales data early into Thursday’s session. China is Australia’s largest trading partner and economic performance in the former can have knock-on effects for the latter. According to the Citi surprise index, data in the world’s second-largest economy has been tending to disappoint relative to economists’ expectations.

While a downside surprise may bode ill for the Australian Dollar, this may be somewhat countered by APAC equities following Wall Street higher. S&P 500 futures are pointing to the upside as regional bourses begin opening for trading. In the medium-term, there remain numerous uncertainties for Brexit. Until that becomes increasingly clear, gains in stock markets based on alleviating hard-Brexit concerns may only be a temporary sugar rush. Especially with fears about slowing global growth lingering.

US Trading Session Economic Events

GBP/USD No-Deal Brexit Rally Lacks Momentum, AUD Eyes China Data

Asia Pacific Trading Session Economic Events

GBP/USD No-Deal Brexit Rally Lacks Momentum, AUD Eyes China Data

** All times listed in GMT. See the full economic calendar here

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--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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