The pound strengthened yesterday and during today’s Asian session, as UK’s PM got the Cabinet’s approval for the Brexit deal negotiated. The deal is considered as allowing the UK to avoid the messy hard Brexit departure for the EU, however it still needs the UK parliament’s approval. In a statement made after the Cabinet meeting UK’s PM Theresa May, made a bold statement giving parliament three options, this deal, no deal or no Brexit, adding pressure on Parliament for the deal’s approval. Brexit hard liners are expected to react angrily and it remains uncertain whether the PM will be able to pass the deal through Parliament. Hence gains for the pound seem capped, by worries about the final outcome. Volatility is expected to continue for the pound, as further Brexit headlines could continue to reel in and UK financial data are due out today.
Cable experienced some volatile trading yesterday, however was not able to clearly break the 1.3015 (R1) resistance line. We could see the pair continuing to trade in a volatile manner today and we expect the pair to be sensitive to any further Brexit news, as well as the UK and US financial releases later today. Should the bulls be in control of the pair’s direction we may see it breaking the 1.3015 (R1) resistance line and aim for, if not break the 1.3075 (R2) resistance hurdle. Should the bears take over, we could see cable breaking the 1.2920 (S1) support line and aim for lower grounds.
USD retreats further as risk sentiment improves
The USD retreated further yesterday, against its major counterparts as the risk sentiment improved after the UK Cabinet backed the Brexit deal. Analysts point out that the US Dollar continues to maintain tis safe haven status and are considering a hawkish Fed and robust financial data, as drivers of a possible comeback. Analysts also point out that he Dollar’s correction yesterday was due to the rallies of the EUR and GBP on Brexit, but also the AUD due to favorable employment data early this morning. We could see the volatility for the USD increasing, as favorable US financial data are expected to be released later today.
AUD/USD rallied during today’s Asian session, breaking the 0.7240 (S1) resistance level (now turned to support) and testing the 0.7280 (R1) resistance line. We could see the bullish sentiment continue to drive the market if the positive sentiment for the Aussie continues and at the same time the USD weakens further. Should the pair find fresh buying orders along its path we could see it breaking the 0.7280 (R1) resistance line and aim fi not break the 0.7315 (R2) resistance level. Should on the other hand the pair come under the selling interest of the market, we could see it dropping and breaking the 0.7240 (S1) support line and aim for the 0.7200 (S2) support area.
In today’s other economic highlights:
In today’s European session we get UK’s retail sales growth rates for October. In the American session we get the US retail sales growth rates for October, later on the Philly Fed Business index and last but not least the EIA weekly crude oil inventories figure. As for speakers, Riksbank’s deputy governor Jochnick, ECB’s Coeure and Praet, BoE’s Tenreyro and Fed’s chair Jerome Powell, as well as Quarles, Bostic and Kashkari, speak.
AUD/USD H4
Support: 0.7240 (S1), 0.7200 (S2), 0.7160 (S3)
Resistance: 0.7280 (R1), 0.7315 (R2), 0.7360 (R3)
GBP/USD 4H
Support: 1.2920 (S1), 1.2850 (S2), 1.2780 (S3)
Resistance: 1.3015 (R1), 1.3075 (R2), 1.3160 (R3)
