The Pound is expected to be among the most volatile currencies this week as MPs return to parliament. Consequently, headline risk pertaining to Brexit could be notably elevated, particularly after the Queen accepted Boris Johnson’s request to prorogue Parliament, which in turn will see Parliament suspended from September 12 - October 14th. As such, MPs who oppose a no-deal Brexit could have less time to use legislative procedures in order to block a no-deal Brexit, thus raising the likelihood that opposition parties may look towards putting forward a motion of no-confidence in the government.
Over the weekend tensions have appeared to be rising, with Johnson vowing to purge rebels who vote against no-deal. Some MPs who oppose leaving the EU with a no deal – including conservatives – are planning to take action in Parliament this week. Alongside this, Jeremy Corbyn continues his push towards blocking a no-deal, insisting that using a vote of no confidence to bring down the government remained an option. As such, Boris Johnson is claimed to have plans to sack any of the conservative MPs who back either of these moves.
Cable is currently trading closer to 1.2100. Alternatively, a break below the March 2017 lows and 1.2100 would provide bearish confirmation for a move down to a target at the 1.2015 lows.
Alternatively, the pair could also recover and continue going higher. For confirmation of this, however, we would ideally wish to see a break above 1.2375. Such a move could then indicate a continuation up to a target at 1.2550.
GBP/EUR is currently trading at around the 1.1030 levels at the start of the week, having registered a 0.37% advance last week. A break above the 1.1100 level, however, would likely signal the moving average had been breached and the pair was going higher, and such a move could see a rise up to a target at 1.1310.
The current support level on GBP/EUR is at 1.0975.
The Relative Strength Index (RSI) is below 30 on the 4 hour chart – indicating oversold conditions – and a potential rebound. After an initial bounce, EUR/USD may resume its falls as momentum is still to the downside, and the pair trades below the 50, 100, and 200 Simple moving Averages.
Resistance awaits at the psychologically significant level of 1.1000, followed by 1.1027 – the previous 2019 trough.
Initial support is at 1.0962, which was the low point on Friday – the lowest since 2017 – and also a support line back then.
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