British Pound (GBP) Latest: Sterling Under Threat as No-Deal Brexit Risks Increase
Sterling (GBP) Charts and Analysis:
- EU/UK trade negotiators to meet on Tuesday.
- UK government to publish the Internal Market Bill.
UK Prime Minister Boris Johnson has given the EU just 38 days to find an agreement otherwise he suggests that both sides accept that nothing will be signed and ‘move on’. The UK’s date of October 15 is two weeks earlier than the EU’s self-imposed date of the end of October. Johnson said over the weekend that if the two sides cannot find an agreement that the UK then the UK would fall back on WTO trade terms, a move that ‘would be a good outcome for the UK’.
The government is also set to publish the Internal Market Bill this week, with reports that some key areas of the Withdrawal Agreement are to be overridden in the event of a no-deal Brexit. According to reports, the bill will eliminate certain areas of agreement on state aid and the Northern Ireland protocol, something that will rile the EU who have consistently said that the Withdrawal Agreement is binding and crucial to trade talks.
This week there is little in the way of any market-moving UK economic data until Friday when the monthly GDP-3 month average for July is released at 07:00 GMT. Manufacturing and industrial production data for July will also be released. For all economic data and events, see the DailyFX Calendar.
GBP/USD remains in a short-term bullish flag formation but the supportive trendline is under pressure. Last Tuesday’s top-side breakout was pulled back quickly and the recent series of lower highs cast a bearish shadow over the pair. GBP/USD is also testing the 20-dma, and a close and open below here, and trend, opens the way to a cluster of prior lows, and the 50-dma, all the way down to 1.3000. Trend resistance is currently around 1.3370.
GBP/USD Daily Price Chart (January – September 7, 2020)
IG client sentiment data shows retail traders are net-short GBP/USD with a short to long ratio of 1.80, normally a bullish contrarian signal for the pair. However, traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBP/USD price trend may soon reverse lower despite the fact traders remain net-short.
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