The Brexit excitement continues for those dealing with the Pound as the losses of two weeks ago have presented a correction driven, largely, by more speculation over Brexit.
The macro-economic drivers of the Pound have, for some time now, been largely concerned with politics and less with social and economic figures produced by the UK.
During the weekend, we saw Jeremy Corbyn continue his drive towards resisting a no-deal Brexit – suggesting he would do whatever it took to prevent it happening. Boris Johnson, on the other hand, reiterating his position that he would take talks ‘down to the wire’. There is a case for suggesting much of last weeks’ Sterling buoyancy could come from his manoeuvring, with the sentiment far more characterised as brinkmanship than in the previous administration.
Over the pond, Donald Trump has announced that the US will resume trade talks with China ‘very shortly’ – though no significant confirmation has been presented by China as yet. Commodity currencies are being pushed lower as markets attempt to price in continued fears of global growth amid the trade war– any exposure to these currencies are unlikely to be alleviated until some salient plan has been formulated in the trade war.
Trump also was notably isolated from talks at the G7, where environmental concerns were on the table for discussion. This is consistent with his previous positions on the environment and EU/Internationally cohesive resolutions and it is hardly surprising he was absent but it continues to mark a departure from European issues of the US, a previously close political partner in these respects. Macron has done his best to include Trump in these meetings and has made some ground towards this aim, but still falls short of a fully attendant commitment from the POTUS.
To the charts, the levels that are key for the near term:
GBPEUR 1.1080 as upside target and for the GBPUSD 1.2315 – in both cases these levels would open up and solidify gains achieved by the Pound.
EURUSD looks a little more muted in terms of playing the level out from here and, while this level has picked up somewhat – overall this continues its ebbing downward trend.
If you import and sell GBP to do this, this week may very well present an opportunity that many have been waiting for with baited breath.
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