This morning the PM announced the timeline for the negotiations between the UK and the EU, by stating the intention to trigger Article 50 by March 2017. In addition, Chancellor Philip Hammond warned that Britain’s economy is facing a rollercoaster ride over the coming years during the process of negotiation to leave the EU.
After the release of the news, GBPUSD hit one and half month low at 1.2844, breaking the near term major support at 1.2900.
Yet it holds above the significant mid-term support level at 1.2850, which is providing a strong support. The next significant support level is at 1.2800. The price range between 1.2800 – 1.2850 is the major post Brexit support zone, the price is likely to hold or rebound at this level. The bearish momentum is likely to be eased at this level.
This morning also saw the release of the UK Manufacturing PMI for September, which rose to 55.4, beating expectations of 52.1, and the previous figure of 53.3. The outperforming PMI pulled GBPUSD away from the support at 1.2850.
The 4 hourly Stochastic Oscillator is around 20, suggesting a rebound.
The newly formed resistance level is at 1.2900, followed by 1.2915 and 1.2950.
The support line is at 1.2850, followed by 1.2800.
Keep an eye on the US ISM Manufacturing PMI and Prices Paid for September, to be released at 14:00 GMT today, as it will cause volatility to the dollar and major currency pairs.
With better-than-expected figures, GBPUSD will likely fall and test the support at 1.2850 again.
With lower-than-expected figures, GBPUSD will likely rally and test the resistance level at 1.2900.
The market concerns on the uncertainty arising from the negotiation between the UK and the EU, is weighing on Sterling. In addition, the euro firms as the market concerns about Deutsche Bank have eased.
EURGBP rally to three-year high and test the near term major resistance at 0.8720.
Yet the selling pressure between 0.8720 – 0.8800 is heavy, the price is like to pull back at this level.
In addition, the 4 hourly Stochastic Oscillator is around 80, suggesting a retracement.
The resistance level is at 0.8720, followed by 0.8750 and 0.8770.
The support line is at 0.8700, followed by 0.8670 and 0.8650.