·         Testing key support from 50MA (monthly)

·         Capped at 0.8720

·         Reduced no-Brexit deal

The forex traders remain to focus on the GBP for the week ahead. The pound delivered 2.70% return in the week ended October 18, was backed by the Brexit deal hopes. Over the past seven weeks, relentless GBP buying and short-covering push the price above all daily moving averages, which hasn’t seen since mid-2018.

The cable rose 850+ points or 8.30% to nearly 1.30, and the EURGBP lost more than 8.00% to sub-0.8600.

“Prime Minister Boris Johnson vowed he’d never, ever ask the European Union to push the Brexit deadline beyond October” Washington Post reported.

Data review:

· The rate of pay growth has trended upwards since March to May 2017, to be close to 4%, which is the highest nominal pay growth rate since 2008. However, from June to August 2019, growth dropped slightly to 3.8% for both total pay and regular pay, according to INS. And the other data point the UK unemployment rate was estimated at 3.9%, this is lower than a year earlier (4.0%) but 0.1 percentage points higher than the previous quarter.

· The retail sales was flat (0.0%) in September 2019 when compared with the previous month, following a fall of 0.3% in August 2019.

· Whereas the CPI 12-month inflation rate was 1.7% in September 2019, unchanged from August 2019.

Data preview: All focus remains on UK politics in the outcome of last week’s Vote.  

“Prime Minister Boris Johnson will find out Tuesday evening whether he has any chance of getting his Brexit deal through Parliament — and whether he can do it ahead of his October 31 deadline.” Bloomberg reported.

Reuters cited “No more delays, UK PM Johnson appeals to parliament to back Brexit bill”

Our baseline remains the same that the deadline extension is highly likely and also expect UK general elections are highly likely before a Brexit deal.

TECHNICAL OUTLOOK

EURGBP is testing key support from 50MA (monthly) at around 0.8535 and double bottom at 0.8470.

The cross is now trading tad above key support level provided by 50MA (Monthly)whereas lost 200MA (Weekly). Now focus on to 0.8530, followed by 0.8470 suggested by the A-B-C corrective wave structure.

The resistances seem to be at 0.8660 and 0.8720. The daily indicators are oversold RSI at 28, expect a bullish crossover on Oscillator in a day or two.

If the cross is moving higher, watch out for 0.8780. This view would be invalid if the price lost the support of 0.8470.

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

A question? Let us help!

A KTM Analyst is ready to assist you, click on the comment section below