Last Friday’s NFP was disappointing. The reaction of the markets was astonishing. Will it last longer? Let's find out the main trade opportunities for the upcoming week.
How deep may pound dip?
2020-09-11 • Updated
The pound has slumped against other major currencies amid fears over the no-Brexit deal. More details have recently come out over EU-UK tensions. Let’s get into them straight away.
The European Commission claimed on Thursday that it would give a deadline up to the end of September to the United Kingdom to back out the Internal Market Bill (IMB), which violates the initial EU-UK agreement, reached in 2019. If the UK doesn’t withdraw the bill, the EU will take legal action. Further negotiations will continue next week.
The main sticking point is Northern Ireland’s border. The initial agreement was created to avoid the need for a hard border between Northern Ireland and the Republic of Ireland. However, the new legislation, offered by Boris Johnson, may undermine it. The EU threatened the UK with financial, agricultural, and trade sanctions. Nevertheless, the UK Prime Minister stay confident to pass the bill, shrugging off the EU’s disagreement. As a result, the GBP is falling amid Brexit uncertainties.
Elsewhere, the mixed data from the UK came out today. Construction output, industrial, manufacturing production, and GDP exceeded expectations, while goods trade balance and index of services came out worse than the forecasts. Let’s look at the charts.
The yesterday ECB statement underpinned the euro, which led to huge swings on the EUR/GBP chart. The pair has approached the resistance of 0.9300. If it manages to break it, it will surge to the March high of 0.9415. In the opposite scenario, if it falls below the low of March 23 at 0.9150, the way to the key psychological mark of 0.9000 will be clear.
Besides, there are large bearish movements on the GBP/CAD chart. The move below the low of June 19 at 1.6750 will drive the pair down to the March low of 1.6600. Resistance levels are at the key psychological mark of 1.7000 and the strong resistance of 1.7200, which it has failed to cross in the June-July period.
Weaker recoveries were seen in both the UK manufacturing and service sectors, with the latter recording the greatest loss of momentum since July.
The US economic releases came in with much better than expected today, adding further evidence for the Federal Reserve, a day after the FOMC Meeting Minutes…
How will the new variant affect the markets and the economy? What is its relationship to inflation and interest rate hikes, and how will it affect those things?
Are you searching for trade opportunities for December 6-10? Here you go!
Both omicron and Powell’s comments increased volatility in EUR/USD. What to expect further?