- GBP spikes again on the latest positive Brexit headlines. EUR’s chief negotiator Barnier said agreement possible early November.
- UK macroeconomic news support GBP. The GDP MoM growth rate was 0.3% in May 2018, 0.1% in June and 0.3% in July.
- Today’s UK employment data is likely to provide a larger clue for EURGBP.
The latest positive Brexit headlines are supportive to the pound overnight. Brexit negotiator Michel Barnier said “a Brexit deal is possible within six to eight weeks” BBC reported. The other week he said “We are prepared to offer a partnership with Britain such as has never been with any other third country,” the negotiator told reporters following a meeting with the German foreign minister in Berlin, reported by Telegraph. It seems Michele Barmier have held responsible for GBP rally, 1.50% against the USD and 2.00% against the EUR.
The cross EURGBP has hit a fresh 2018 high in end of the August led by no-Brexit pricing but rejected at the 61.8 fib reaction of 0.9598-0.8300. Turning to the technical picture, the daily studies RSI is below 50.00, and the oscillator is remaining bearish. Moreover, the cross has lost both its 20 and 50MAs and currently trading tad above 100EA.
The crucial, pivotal level, which will act as crucial support, is placed at 0.8890. Below here, the focus will move down to 0.8860 its 50.0% fib reaction, followed by 0.8850 it’s 20MA (Weekly) and 0.8830 its 200MA. Fresh catalyst (Today’s UK employment data and ECB meeting, Thu) needed to forecast further retracement to 0.8800 and 0.8730.
The shift in the 4hr chart indicates rallies to resistance at 0.8940/0.8960, 0.9000 and 0.9030 should attract selling interest.
- Data review:
UK GDP in July expanded by 0.3% from 0.1% in June. In the three months to July (May-July) the growth picked up to 0.6%, highest since August 2017. The growth was driven by services and construction, with a small drag on growth from production, according to Office for National Statistics.
- Data preview:
Central banks: Key market events for the week includes European Central Bank and Bank of England policy meeting, we expect on hold.
On Tuesday, UK unemployment data due for release by the ONS. We expect the unemployment rate will remain at 4.0% and we are more focusing on the wage growth.
On Thursday, we expect the Bank of England remains on hold unanimous and, thus it will be uneventful.
UK Politics and the data outcome are the catalysts for the GBP this week.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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