Pound suffers on Brexit fears

10 August, 2018

The fallout has continued for another day for the pound, as it continues to find itself coming under immense pressure from financial markets. It's clear that markets now believe that while there is some hope of a deal there is more concern that a hard Brexit is more a reality than anything else. The only thing now that could provide a welcome boost for the UK economy is GDP figures out tomorrow, which are expected to show a boost of 0.4% for the quarter. If we saw a weaker number here coupled with the Brexit fears it could send things sharply lower, so right now is a testing time for the GBP and GBPUSD in particular.

Looking at the GBPUSD on the charts and it's clear to see that the bears are in control and taking huge swipes whenever the chance appears. With that in mind the market is currently pausing around support at 1.2798, but the reality is that we could see a further push through soon to 1.2652 in the current market climate. On the flip side if we do see a positive GDP reading then we could see the bulls come back into the market and look to retest resistance levels - I'm not sure how much appetite there is for that at present though. When looking at these levels I would focus on 1.2958 and 1.3069 as well, but as mentioned it would be a tough ask in the current market environment.

The other big loser in the markets has been the New Zealand dollar, which came under pressure after yesterdays Reserve Bank of New Zealand announcement, that it intended to keep rates flat at 1.75% until 2020 at least. This has been ever further impacted by the national milk company Fonterra cutting milk prices for 2017/2018 which will have a flow on effect for the economy. All in all its not looking up at present for the NZD and it has fallen against all the major pairs as a result. If the central bank is lacking in confidence then markets will be no strangers to lacking it either, the only long term reprieve is of course a weaker NZD means better export earnings which will have  a dampener effect on the current situation.

As the NZDUSD continues to find itself under pressure the trend line will be a key factor for the bears and the bulls, as if there was going to be any chance of a resurgence it would be here I feel. Support around the 0.6565 level will also be key to say the least, but if the bulls really want to show there abilities then this will be the key area for it. If that fails then I would expect a quick run down to the next level of support at 0.6510 in the present market environment.


Source link  
Risk-off mood hovers over Asian markets

Risk-off mode continues to cast a cloud over Asian assets, as media reports pour cold water on hopes that a US-China trade deal can be sealed...

Pound boosted by Brexit party decision

Sterling exploded higher on Monday, gaining roughly 0.8% against the dollar after the Brexit party said it would not contest Conservative seats in the...

What to watch when Fed meets this week

After lowering interest rates twice in 2019, investors across all asset classes are awaiting the FOMC rate decision when it wraps up its two-day meeting...


Pound in focus as Brexit saga goes on

The Pound remains in the spotlight, as investors brace for more political drama surrounding Brexit. Although UK Prime Minister Boris Johnson has...

Dollar index drops after US retail sales contraction

The Dollar index (DXY) immediately fell by some 0.2 percent, dropping below the 98.0 psychological level once more...

Dollar's fall halted at 98.4 support level

The Dollar index (DXY) fell by about 0.38 percent before paring back losses, as the 98.4 support level kicked in. Although the September US inflation...


Dollar paring early October losses

The Dollar index (DXY) continues to pare losses seen earlier this month, as investors await the minutes from the September FOMC meeting...

Gold hammered by resurgent Dollar

Gold tumbled more than $30 on Wednesday, almost breaking below $1500 as political uncertainties in the United States and Brexit...

Time to prepare for 100 in the Dollar Index?

The Greenback is on a tear and the breach above 99 in the Dollar Index makes 100 look very appetizing on the menu. The stunning run of buying...

  


Share it on:   or