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Brexit Latest: Sterling (GBP) Remains Vulnerable to Deal Backlash

Brexit Latest: Sterling (GBP) Remains Vulnerable to Deal Backlash

Nick Cawley, Senior Strategist

Sterling, Brexit and US dollar:

  • Sterling unlikely to move ahead of this weekend’s EU27 leaders meeting.
  • Proposed political declaration will not get through the House of Commons.

We have just released our Brand New Q4 Trading Forecasts including USD and GBP.

IG Client Sentiment shows that retail traders are 71.5% net-long of GBPUSD – a bearish contrarian indicator. When daily and weekly positional changes are factored in - the number of traders’ net-long the pair is up 29.2% on the week – we get a stronger bearish contrarian trading bias.

Sterling Treads Water as Political Noise Increases

UK PM Theresa May will go to Brussels this weekend to continue talks with EU Commission President Jean-Claude Juncker on the draft Brexit agreement. The UK PM on Thursday said that the deal was ‘within our grasp’ and that it fulfilled the mandate given to the Government when the UK voted to leave the EU. The Prime Minister’s enthusiasm for the deal was not matched by others who repeated that in its present form that the bill would not pass through the House of Commons, leaving the UK in limbo ahead of the March 29, 2019 leave date. In addition, the Spanish Prime Minister Pedro Sanchez has muddied the waters by saying that he would vote against the proposal unless Spain have a say on the future of Gibraltar. While this vote would not stop the draft agreement going through – the vote is based on a majority decision – it highlights the ongoing friction between the UK and EU as member states pile on the pressure.

GBPUSD has remained within a tight trading range this week and looks unlikely to make a move ahead of Sunday’s EU leaders meeting. The pair have been trading in a1.2770 – 1.2925 range all week with volume trimmed by the US Thanksgiving Holiday. Any rally will be met by resistance around 1.2922 before the 20- and 50-day moving averages at 1.2932 and 1.2983 come into view. Initial support at 1.2763 ahead of the multi-month low at 1.2662.

Recent Brexit Articles:

GBPUSD: Brexit Fears Remain as UK PM May Heads to Brussels.

Brexit Chaos Leaves Sterling Still Vulnerable to Whiplash Moves.

GBPUSD Daily Price Chart (March – November 23, 2018)

Traders may 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.

What is your view on GBPUSD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.com or via Twitter @nickcawley1.

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

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