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Brexit Latest, GBP/USD Rally Struggles, EUR/GBP Fades Lower

Brexit Latest, GBP/USD Rally Struggles, EUR/GBP Fades Lower

2019-08-06 11:00:00
Nick Cawley, Strategist
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Sterling (GBP) Pairs - Prices, Charts and Analysis:

  • UK PM still faces a strong internal battle to get Brexit through on time.
  • Sterling (GBP) trying to rally back after recent heavy sell-off.

Q3 2019 GBP Currency Forecasts andTop Trading Opportunities

Keep up to date with all key economic data and event releases via the DailyFX Economic Calendar

Sterling (GBP) Ignores Brexit News

Former attorney general and staunch Remainer Dominic Grieve has said that while the House of Commons may be unable to stop PM Boris Johnson taking the UK out of the EU on October 31 without a deal, ‘there are a number of things the House of Commons can do, including bringing down the government and setting up a new one in its place’. Earlier, Boris Johnson’s top adviser Dominic Cummings said that it was now too late to stop a no-deal exit, and that even if the PM lost a vote of no-confidence, he could call for an election the day after the UK left the EU, rendering the Remainers plan ineffective.

What-is-The-Brexit-Backstop-and-How-Does-it-Impact-The-Pound

Sterling has taken the latest round of Brexit news in its stride and is starting to re-coup some of its recent heavy losses against both the Euro and the US dollar, although both pullbacks look weak so far.

GBPUSD currently trades just under 1.2200 after hitting a 27-month of 1.2079 last Thursday. The daily chart shows a pattern of four higher lows in a row (Sunday candle excluded) although momentum is weak and may turn lower at any time. GBPUSD will likely struggle to break back above the high print on the July 29 sell-off candle at 1.2382 unless there is a bout of positive Brexit news, or if the US dollar sells-off sharply.

GBPUSD Daily Price Chart (October 2018 – August 6, 2019)

Brexit Latest, GBP/USD Rally Struggles, EUR/GBP Fades Lower

Retail traders are 77.7% net-long GBPUSD according to the latest IG Client Sentiment Data, a bearish contrarian indicator. However recent daily and weekly positional changes suggest that GBPUSD may soon reverse higher.

EURGBP has edged lower after hitting a near two-year high earlier in today’s session. After trading at a low of 0.8490 in early May, the pair has powered higher with green (bullish) candles dominating the chart. While the euro will be impacted by a no-deal Brexit, in the short-term the downside looks limited and any sell-off should find support around 0.9050.

EURGBP Daily Price Chart (November 2018 – August 6, 2019)

Brexit Latest, GBP/USD Rally Struggles, EUR/GBP Fades Lower

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 Sterling (GBP) – 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.comor via Twitter @nickcawley1.

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

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