Sterling (GBP) Price Drifts Lower on Brexit Uncertainty, Hard Data Flow Next
Brexit Latest and Sterling Prices, Charts and Analysis
- Brexit rumours now hitting extremes with talk that UK PM Johnson will ignore the law.
- UK manufacturing and industrial data and monthly GDP.
Sterling opens the week in negative territory across the board as traders try and make sense of the weekends news flows and stories. UK PM Boris Johnson is said to be considering ignoring a bill – to be passed today – legally forcing him to ask the EU for an extension if a Brexit deal is not found by mid-October. The PM is hoping that by explaining the UK’s situation – while asking for an extension - that the EU will refuse to grant an extension, in which case PM Johnson would call a General Election before the October 31 Brexit date.
PM Johnson is in Ireland today to meet Taoiseach Leo Varadkar to discuss the Irish backstop, yet nothing is expected from the meeting, although any breakthrough, or hint of one, could spark volatility in the Sterling space.
The economic calendar is full of potentially market moving data releases with the latest look at industrial, manufacturing and construction PMIs, alongside the monthly GDP release. UK data has been weak of late, with the economy expected to flat-line, or contract, in Q3. Today’s figures are likely to keep underpin the current negative outlook as Brexit continues to hit the UK’s bottom line.
GBPUSD currently trades either side of 1.2250 in a market lacking any real direction. It is noticeable that last week that GBPUSD had bouts of volatility, especially on Tuesday and Wednesday, with wider than normal ranges. Price action is expected to remain volatile over the next few weeks. GBPUSD will struggle to break and close above the recent 1.2350 multi-week high, while reasonable support is not seen until around 1.2100.
GBPUSD Daily Price Chart (February – September 9, 2019)
IG Client Sentiment data show that of retail traders are 66.7% net-long of GBPUSD, a bearish contrarian indicator. However, recent daily and weekly positional changes give us a stronger bearish contrarian trading bias.
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