• Taking profit on our long GBP/XXX trades
  • Focus on EURJPY and USDJPY

The pound extends the rally this week as well on continued dollar weakness and latest developments of Brexit. The pound rose between 1.50-2.30% against the most traded currencies, led by GBPCAD with 2.30%. On a monthly basis, GBPCHF, EURGBP, and GBPUSD rose 3.30% each while GBPJPY rose only 2.00%.

During the recent GBP rally EURGBP, GBPJPY, GBPAUD, GBPCAD, and GBPNZD ran through the targets we set last week. The cable recorded the most robust rally on a monthly basis, so far since Jan 2018. Moreover, the cable has been moving higher for six consecutive weeks. Back in August 2018 and December 2017 the run lasted for the same six weeks, but in August 2012 the run lasted for seven weeks.

Based on these facts, we expect the GBP appreciation theme is going to stop by tomorrow or probably in the next week. However, the chances are remote.

On Wednesday GBP and JPY sits atop the G10 FX table. This comes after the Yen underperformed Wednesday, but USDJPY and EURJPY fail to break through the key resistance levels. But USDJPY support raised to 109.00/109./15 from 107.75.

Gold lost 2$ overnight, failed to handle the parallel resistance (R1) in Asia-Pacific session and fell back to the support as the day progress. As we forecast on Wednesday (Tokyo session), the price failed at the resistance level. The trend remains in a tight range between 1276-1287$.

Brent crude oil lost nearly 3$ so far this week after rallied three consecutive weeks. The level 63.75$-64.00$its 38.2 fib reaction is in focus for me. Any break and hold above would have me looking to the 66.00$, 68.50$ and 70.00$.
Today’s pivotal finds around 60$ below here, focus shifts to 59.50$/59.00$ and 58.50% its 20MA. The daily oscillator has turned bearish.

Read weekly Brent forecast

In Asia this morning, the focus remains on Aussie December labor force data. Turning to Europe, we will see PMI surveys and ECB January policy meeting.

Join: Perspectives on interest rates in the EUR and USD for 2019

In this online seminar, we will explain the different monetary policies that are planned by the European Central Bank and the US FED and the forecast of interest rates for this 2019


It is important to always keep in mind the risks involved in trading with leveraged instruments.

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