Sterling (GBP) Stuck Between Russia And Brexit
Sterling (GBP) News and Talking Points
- The Russian spy crisis escalates with Russia looking to expel UK diplomats.
- Brexit Junior Minister says UK very close to transition deal.
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Sterling Traders Looking at Two News Flows
GBPUSD remains mired mid-range as Russian and Brexit news flows battle to decide the next move for the pair. Moscow announced recently that it would retaliate over the expulsion of 23 Russian diplomats from the UK, while Russian Foreign Minister Sergey Lavrov stated that the UK’s allegations over the poisoning of a former Russian spy in Britain were false. Lavrov also said the UK PM Theresa May was using the situation to distract from Brexit negotiations.
Earlier this week, GBP was lifted after Junior Brexit Minister Robin Walker said that a transition deal is very close and likely to be signed off before the end of the month, while Brexit Minister David Davis said recently that the transition period will be based on existing arrangements and will end in December 2020.
GBPUSD remains stuck Thursday with the charts showing the pair falling towards the 100-day EMA level – a bearish technical signal – while the stochastic indicator shows GBPUSD is now in oversold territory.
GBPUSD Price Chart One Hour Time Frame (March 9 – March 13, 2018)
The latest IG Client Sentiment Indicatorshows 46.3% of traders are net-long GBPUSD with the ratio of traders short to long at 1.16 to 1. The number of traders net-long is 1.9% higher than yesterday and 0.1% lower from last week, while the number of traders net-short is 3.0% higher than yesterday and 14.9% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBPUSD-bullish contrarian trading bias.
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--- Written by Nick Cawley, Analyst
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.