British Pound (GBP) Update - Sterling Staring at a Make-or-Break Brexit Weekend
Brexit and Sterling (GBP/USD) Price, Analysis and Chart:
- Brexit deal or no-deal by Sunday evening.
- Sterling slipping lower as Brexit rhetoric increases.
It may well be that after over four years of rancor and haggling that Brexit negotiations come to a head this weekend, one way or another. UK PM Boris Johnson had already set a December 31 deadline for a deal/no-deal while the European Parliament said yesterday that Sunday evening would be the deadline for any deal to be ratified in time before the end of the year. Comments recently out from EU chief negotiator Michel Barnier – we have very little time left, few hours - seem to confirm this, leaving Sterling very much at risk today. UK PM Boris Johnson has also said that talks are in a ‘serious situation’ leaving the market to try and work out if both sides are using their final bluff cards or if they are serious about a no-deal.
Sterling is edging lower across the board, albeit from recent highs, and has even slipped lower against a weak US dollar. GBPUSD printed a 32-month high yesterday around 1.3628 before edging lower and currently trades around 1.3540. The technical outlook still looks positive although the CCI indicator is showing the pair in extreme overbought territory.
GBP/USD Daily Price Chart (April - December 18, 2020)
Retail trader data show 35.00% of traders are net-long with the ratio of traders short to long at 1.86 to 1. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/USD prices may continue to rise.
Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger
GBP/USD-bullish contrarian trading bias.
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What is your view on Sterling – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.
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