👉 The absence of any update following informal U.K.-EU trade talks at a Tuesday dinner suggests little progress was made, which is negative for sterling, MUFG Bank says. “We do not expect to see GBP fortunes change unless a Brexit deal is agreed and we would view no news from last night as more likely bad news,” MUFG analyst Derek Halpenny says.
👉 The pound was the second worst performing G10 currency after the Japanese yen in the second quarter, despite improved risk appetite, which indicates that Brexit is “acting as a drag,” he says. GBP/USD is last flat at 1.2546 and EUR/GBP rises 0.1% to 0.8986.
👉 Markets are looking for a new direction after stocks retreated and the dollar gained some ground on Tuesday. Concerns about coronavirus cases in the US and geopolitical tensions are in play.
👉 Gold remains close to $1,800 after hitting $1,797 on Tuesday, the highest since 2012. Exchange-Traded Funds backed by the precious metal report their seventh consecutive month of positive inflows, adding $40 billion in June or 104 tons of gold.
👉 Brexit: UK PM Boris Johnson has told German Chancellor Angela Merkel that Britain is ready to end the transition period without a deal. Both sides remain at odds over trade, regulation, and also fisheries. The call between the leaders came as top negotiations met for dinner in London and reportedly had fish as the main dish.
👉 Foreign exchange markets look trapped amid likely low liquidity due to a lack of follow-through price action from one time zone to the next, AxiCorp says. However, “risk-on” currencies appear to be on the defensive, with enthusiasm for risk probably reversing as Covid-19 “hot spots” still linger, as suggested by the re-imposition of a lockdown in Melbourne, AxiCorp says. Economic data also indicate a long and bumpy recovery ahead with weaker figures out of Germany and Australia, AxiCorp adds.
👉 Spot gold price extended its winning streak to a fourth session, gaining $10.00 (+0.6%) to $1,795 an ounce, the highest close since September 2011.
👉 Dollar Index rose 0.2% on day to 96.97. Federal Reserve Bank of Atlanta President Raphael Bostic said the coronavirus impact might go on longer than they had expected and planned for.
👉 FBI Director Christopher Wray, asked if there were concerns China could be targeting the November presidential election, says: “It’s not an election specific threat. It’s really more of an all-year, all-the-time threat, but certainly that has implications for elections, and they certainly have preferences that go along with that.” Wray was speaking at an event hosted by conservative think tank Hudson Institute.
Here are the High Impact Economic events expected today:
As we have observed earlier in the Currency Monitoring Chart, we discovered that GBP/AUD lines are separated with the farthest distance.
The following is GBP/AUD looking at 4 hour chart:
The following is GBP/CAD looking at daily chart:
INTRADAY MARKET INSIGHTS
Rebound expected. The pair is rebounding from a key support at 107.45. Currently it has shot above the upper Bollinger band calling for acceleration to the upside. A further rebound should bring the pair toward 107.65 and 107.80 (around the intraday high of yesterday) on the upside. Alternatively, a return to the key support at 107.45 would open a path toward 107.30 on the downside.
Under pressure. The pair remains on the downside after a rebound proved to be unsustainable. Currently the pair has returned to levels below both 20-period and 50-period moving averages. A return to 1.1255 (around the intraday day low of yesterday) would trigger a further fall toward 1.1235 on the downside. Only a break above the key resistance at 1.1305 would call for a bullish reversal.
Bearish bias remains. The pair retreated and returned below both 20-period and 50-peirod moving averages. The relative strength index is below its neutrality level at 50, showing the lack of upward momentum for the prices. Hence, as long as 0.6980 acts as the resistance level, expect a drop with targets at 0.6920 and 0.6900 in extension. On the other hand, a break above 0.6980 would call for another up leg with 0.7000 and 0.7020 as targets.
Downside prevails. The pair retreated from 0.6573 (the high of July 7) and crossed below both 20-period and 50-period moving average. The relative strength index stays around its neutrality level at 50, showing the lack of momentum for the prices. In this case, as long as 0.6573 is not surpassed, intraday bearish bias remains with down targets at 0.6508 and 0.6490. On the other hand, a break above 0.6573 would turn the outlook to positive and call for an advance with 0.6603 as a target.
Under pressure. The pair failed to continue its advance after reaching 1.2585. Currently, prices broke below the 20-period moving average. The relative strength index also reversed down from its overbought level at 70. Therefore, as long as 1.2585 holds on the upside, look for a consolidation move with targets at 1.2520 and 1.2490 in extension. In an alternative scenario, breaking above 1.2585 would indicate the resumption of previous up trend and call for a rise to 1.2620 and 1.2660 as targets.
The following is GBP/USD looking at daily chart:
The following is a Trading Central insights for GBP/USD daily chart:
Rebound expected. Although the pair posted a pullback, a support base at 0.9405 has formed and has allowed for a temporary stabilization. The relative strength index stays around its neutrality level at 50, showing the lack of downward momentum for the prices. To conclude, unless the support level at 0.9405 is violated, the pair should rebound to 0.9440 and even to 0.9450 in extension. Alternatively, crossing below 0.9405 would trigger another down leg with 0.9390 and 0.9380 as targets.
Upside prevails. The pair has broken above a bearish trend line drawn from June 30. Currently, the 20-period moving average has moved further above the 50-period one, while the relative strength index has climbed to the 60s, indicating a bullish bias. Above the key support at 1.3570, expect an advance to 1.3625 and 1.3650. Alternatively, a break below 1.3570 would trigger a pull-back to 1.3545.
Target 120.38. The pair remains on the downside as it has formed a lower-high. Currently, it is trading at levels below both the 20-period and 50-period moving averages, while the relative strength index remains subdued in the 40s, signaling a bearish bias. Unless the key resistance at 121.62 is surpassed, the pair should target 120.65 and 120.38 on the downside. Alternatively, above 121.62, expect a bounce to 122.06.
Rebound. The pair maintains a bullish bias above the key support at 0.8956. In fact, it has rebounded to levels above the 20-period moving average, which is turning upward. As long as the key support at 0.8956 holds, expect a rebound to 0.9023 and 0.9040. Alternatively, a break below 0.8956 would trigger a decline to 0.8927.