• The start of the week was a little quiet until President Trump one again accuses China and EU of currency manipulation, and he also criticizes the Fed to raise interest rates.
  • It was a quiet one for GBP overnight, mild bias higher against AUD, CAD, and USD by 0.30% each. However, the EURGBP remain neutral.
  • Brexit headlines and Political concerns are still pricing on the GBP. The week ahead, it will be quiet regarding economic data wise.

Data review:
UK unemployment rate dropped to 4.0%; it has not been lower since December 1974 to February 1975 (43 years);
Wage growth increased by 2.7% excluding bonuses, and by 2.4% including bonuses;
CPI 12-month rate was 2.5% in July 2018, up from 2.4% in June 2018;
In July 2018, retail sales increased by 0.7% when compared with the previous month, recovering from a decrease of 0.5% in June 2018

Data Preview:

The week ahead, it will be quiet regarding economic data wise. We are more focusing on Brexit headlines volatility. Brexit secretary will travel to Brussels on Tuesday to meet EU’s chief negotiator Michel Barnier to speed up the pace of Brexit talks.

FX overview

The GBP has been capped in the past few weeks, regardless of the better unemployment rate and retail sales data out last week. GBP experience massive landslide in the past few weeks as the probability of a “no-deal” Brexit is on the toll. The GBP sentiment has pushed to an extreme bearish level since Oct 2016.

UK political risk and no-deal factors have dominated the price action in GBP in the past few days, and we expect the GBP is nearly priced in the negatives.
Looking at the EURGBP technical landscape, the price pattern behavior has not changed since last week.

Last week’s forecast: The euro cross traced out a near-term price top near 0.9030 in 2017-2018 via the formation of a double top pattern. The daily studies RSI and oscillator have been shifted bearish. The shift in sentiment indicates that rallies to resistance at 0.8970-0.9030 should attract selling interest, with substantial support finds at 0.8935, 0.8900 and 0.8840. Below here, the focus will move down to 0.8770 and 0.8730-0.8700. Confidence in a top will increases below 0.8895.

Potential threats remain between 0.9030-0.9080. We look to capitalize on these developments by suing moves to 0.9030-0.9070 as a selling opportunity, with a take profit at 0.8850. To limit the risk use, stop above 0.9080 on a weekly closing basis. A bullish break would see further run to 0.9130.

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

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