News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bearish
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • The US Dollar may seesaw as investors navigate what could be a volatile week packed with US GDP data, rising Covid-19 cases, Q3 corporate earnings and more. Get your #currencies update from @ZabelinDimitri here: https://t.co/UNRcd3c9uA https://t.co/BiUiOV4cXC
  • USD/MXN pushes lower towards a critical support level in the midst of continued political uncertainty. Get your #currencies update from @HathornSabin here: https://t.co/HEAzgJJJjg https://t.co/NU9wYbIuni
  • Gold Forecast - via @DailyFX “Gold price outlook still hinges on stimulus deal expectations and corresponding swings in real yields.” What will I have my eyes on in the week ahead? Link to Analysis: https://www.dailyfx.com/forex/fundamental/forecast/weekly/title/2020/10/23/gold-forecast-xau-usd-at-the-mercy-of-a-fiscal-stimulus-deal.html $GC_F $XAUUSD $GLD https://t.co/GWEI4d4mMu
  • Forex liquidity makes it easy for traders to sell and buy currencies without delay, and also creates tight spreads for favorable quotes. Low costs and large scope to various markets make it the most frequently traded market in the world. Learn more here: https://t.co/5uSWKoLkd6 https://t.co/rxswe1gVL0
  • Talks between the EU and UK restarted today and will continue over the weekend as negotiators from both sides battle against the clock. Get your #currencies update from @nickcawley1 here: https://t.co/ER8IT1yxYO https://t.co/Jeeu2P9mwB
  • The London trading session accounts for around 35% of total average forex turnover*, the largest amount relative to its peers. The London forex session overlaps with the New York session. Learn about trading the London forex session here: https://t.co/UTWxbnNz7M https://t.co/W9awqb818J
  • There is a great debate about which type of analysis is better for a trader. Is it better to be a fundamental trader or a technical trader? Find out here: https://t.co/aVAzFypAg1 https://t.co/lucvsACxu5
  • There are three major forex trading sessions which comprise the 24-hour market: the London session, the US session and the Asian session. Learn about the characteristics of each session here: https://t.co/UVvf51HiVP https://t.co/yywnE39MLU
  • The US Dollar is losing ground against ASEAN FX, with USD/SGD and USD/IDR possibly readying to extend declines. Will USD/PHP and USD/MYR follow? Find out from @ddubrovskyFX here: https://t.co/l705RWumj5 https://t.co/jBbMKYp0F5
  • There are many different types of forex orders, which traders use to manage their trades. While these may vary between different brokers, there tends to be several basic FX order types all brokers accept. Learn about different FX order types here: https://t.co/lIJdiz4xSz https://t.co/YUhC9cCDpy
GBP/USD Breaks Down to Flash Crash Lows on Brexit Showdown

GBP/USD Breaks Down to Flash Crash Lows on Brexit Showdown

2019-09-03 08:40:00
Justin McQueen, Analyst
Share:

GBP/USD Analysis and Talking Points

  • GBP/USD Breaks 1.20 Handle
  • Snap Election Provides Additional Uncertainty
  • GBP Implied Volatility Surging

GBP/USD Breaks 1.20 Handle

GBP/USD is once again under pressure as the Brexit showdown between Tory rebels and the government highlights the current constitutional crisis that is weighing on the currency. The pair made a break below the psychological 1.20 handle, hitting a low of 1.1959, which marks the lowest level since the October 2016 Sterling flash crash. Focus today will be on the debate surrounding the Brexit delay bill (looks to delay Brexit till January 31st, 2020), whereby Prime Minister Johnson has threatened to call a general election by October 10th if passed. As a reminder, under the Fixed Term Parliaments Act, for an election to take place, 2/3 of MPs must support this.

UK Election Opinion Polling

GBP/USD Breaks Down to Flash Crash Lows on Brexit Showdown

Source: Politico

Snap Election Provides Additional Uncertainty

As it stands, according to opinion polling, the Conservative Party are comfortably ahead of its opposition parties at 33% with Labour at 23%. As such, a snap election in the Autumn is not only going to increase the political uncertainty but also raise the risk of a more pro-Brexit government, which in turn keeps risks firmly titled to the downside for GBP.

GBP/USD Breaks Down to Flash Crash Lows on Brexit Showdown

GBP Implied Volatility Surging

As the risk of a snap election looms, implied volatility has been on the rise with the 1-week tenor at the highest level since April, while 2-month expiries are nearing the levels seen at the 2016 Brexit referendum as investors continue to price in the risk premium attached to a no-deal Brexit. With that said, Sterling is expected to remain the largest source of volatility across the G10 FX space. Elsewhere, with speculative shorts hovering near extreme levels, there is of course a possibility for a sharp snapback higher, provided the risk of a no-deal Brexit eases slightly. However, as has typically been the case, a sharp move higher tends to provide opportunities to fade.

GBP/USD Breaks Down to Flash Crash Lows on Brexit Showdown

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

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

DISCLOSURES