GBPUSD started bullish at the start of the London session after last Friday’s drop following Salzburg BREXIT-EU fallout. Will the Cable recover further or continue the decline?
The Brexit talks have been the major movers of GBP in the past weeks. Despite last week impressive retail sales data, price quickly dropped from a bullish spike following a negative Brexit headline. The day after, Friday, price crashed after the Salzburg clash. Prime Minister Theresa May’s Brexit proposals were unexpectedly rejected by the EU leaders citing that the details of the proposals would not work. Moments after, GBP dropped about 200 Pips close to 1.3050. Furthermore, her critics seeks to capitalize on the EU ambush to push her to ditch her chequers proposals, demand the UK walks from the talks or call for a new referendum. With all these going on, there will be more headlines that will impact GBP price moves as events unfold.
May told reporters that the EU are using tactics to take her off course.
“I have always said these negotiations were going to be tough,” she said. “And at various stages of these negotiations, tactics would be used as part of those negotiations”.
It’s now very clear that the BREXIT negotiations will be very difficult as revealed by the French President Macron. He said:
“Those who explain that we can easily live without Europe, that everything is going to be alright, and that it’s going to bring a lot of money home are liars……..It’s even more true since they left the day after so as not to have to deal with it.”
With these negative news and more pressure mounting on the prime minister and his loyalists, the Sterling could be under more bearish pressure in the coming weeks.
GBPUSD: Technical Overview and Important price levels.
The long term trend is bearish with the emergence of a bearish impulse wave which could see price at 1.10. The rally from 1.265 since August is corrective and with the negative Brexit outcomes persisting, the bearish move might just continue. The rally from from 1.265 hit 1.33 (38.2% Fib-retracement) after a fine retail sales. This medium-term bullish correction is shallow. Higher levels at 1.35 and 1.371 might be tested before the drop continues with the FOMC coming mid-week.
GBPUSD: Intraday technical Overview
Price is currently rallying from 1.3050 and is expected to continue to 1.3140. The drop from 1.33 is making a bearish impulse wave which might confirm the end of the 38.2% long term Fib-correction discussed earlier. At the intraday level, price might be resisted at 1.3140 and its neighborhood to complete an intraday wave iv. A drop would be expected afterwards to 1.3 before a bigger bullish correction. In as much as price stays below 1.33, the bearish trend is much likely to continue.
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