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Sterling Price: GBPUSD Rallies Hard on Brexit Deal Chatter

Sterling Price: GBPUSD Rallies Hard on Brexit Deal Chatter

2018-10-10 08:02:00
Nick Cawley, Analyst
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Sterling (GBP) Price and Brexit News.

  • Positive Brexit news drives Sterling higher.
  • GBP needs Brexit confirmation before Sterling can really push ahead.

The DailyFX Q4GBP Forecast is available to download.

Late Tuesday a report circulated that the EU and UK were close to agreeing a Brexit deal, causing Sterling to pop higher against a range of currencies. While there was no official confirmation or comments on the report, the market is now starting to remove the ‘no-deal’ discount that has been priced into the market over the last few months. This shift now sees Sterling starting to further regain post-referendum losses and, if the report is true, would leave GBP set to rally much further.

Brexit news however has a habit of being misrepresented and traders/investors should wait to see for official confirmation from Brussels that an agreement is on the table. And the composition of the agreement could well be crucial to getting the UK Parliament to sign it off. UK PM Theresa May’s favored option, Chequers, looks to be a non-starter with both the EU and many hardliners in the Tory Party, while the Canada+++ deal mooted by Michel Barnier and the EU is seen as a more practical, and workable deal.

GBPUSD now looks set to move higher after having broken above both 23.6% Fibonacci retracement at 1.30670 and the recent September 27 high at 1.31784. On the upside, the September 20 high at 1.32986 comes into play ahead of the 38.2% Fibonacci retracement level at 1.33170.

IG Client Sentiment shows traders are 61.4% net-long cable. Despite this being a bearish contrarian indicator, recent daily and weekly shifts suggest that GBPUSD may continue to trend higher.

The comprehensive DailyFX Economic Calendar for the week ahead provides traders with updated data and forecasts across all major currencies, including today’s UK GDP figures. Every Monday we take an in-depth look at all the important UK data releases, Brexit and other UK asset market drivers at 10:30GMT in our weekly UK Key Events and Markets Webinar.

GBPUSD Price Chart (January – October 10, 2018)

Sterling Price: GBPUSD Rallies Hard on Brexit Deal Chatter

Recent Sterling Articles:

October 6 -- GBPUSD Weekly Technical Outlook: Four-Hour Chart Looks Bullish.

October 6 -- GBP: Building a Base on Brexit Hopes

A Longer-Term Look at Sterling

DailyFX forex trading instructor Tyler Yell makes an in-depth, bigger picture technical argument for GBPUSD eventually hitting a high of 1.43770 here – Bullish GBPUSD on Break Above Prior Corrective High at GBPUSD 1.3300.

Traders may also be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

--- Written by Nick Cawley, Analyst

To contact Nick, email him at nicholas.cawley@ig.com

Follow Nick on Twitter @nickcawley1

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

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