Technical Analysis

Cable seems to be in the direction of check of 200-hour shifting common as Brexit deal optimism picks up

GBP/USD consumers look to regain near-term management


The pound is trying perky once more as we speak however I am arguing the case that the upside transfer in GBP/USD additionally has half to do with brief squeezes seen elsewhere. Particularly, the perfect performing currencies as we speak are those which see brief positions most stretched i.e. aussie, kiwi, pound. Consequently, the greenback is struggling throughout the board.

A few headlines and a big transfer or two – coupled with some stability in equities – is sufficient to get markets to shake off the nervous and jittery tones over the previous few weeks. And that is what we’re seeing now.

For GBP/USD, it is all about Brexit nonetheless and it was very a lot headline buying and selling since in a single day after Raab kicked issues off with this one right here. The headline offered little context of what the phrases really meant and that despatched algos popping because the pound was pushed greater (the spike above the trendline resistance circled) however alas, the positive factors did not final because the contents did not fairly match the headline.It was an excellent fade commerce nevertheless it was a touch that pound consumers are searching for any alternatives for an excellent leap greater and after this report right here by the FT, the pound stored with that tone and continues to maneuver greater now.

Worth now seems to be in the direction of a check of the 200-hour MA (blue line) and if consumers can maintain a break above that, the near-term bias turns extra bullish. The break of the resistance trendline is a key one for my part and can assist to offer consumers with extra confidence, nevertheless it’s nonetheless about Brexit headlines proper now.

There’s hints of optimism deal is coming however the particulars are nonetheless very murky and there is not something convincing simply but. However contemplating how a lot negativity has been priced in and the way merchants are reacting (brief squeeze), positioning means that the pound’s upside might final for some time longer as promoting reaches close to stretched ranges.

I would be extra satisfied of an additional upside as soon as the 200-hour MA breaks. Till then, I am nonetheless fairly cautious of any additional upside with out concrete Brexit progress to assist it. Up to now, it has been an excellent run by consumers however they don’t seem to be fairly in near-term management simply but.

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