- GBP/USD has dropped to fresh lows as the dollar adds to its advance towards the 61.8% Fibo just below the 98 handle in the DXY.
- GBP/USD is currently trading at 1.3078, up from a low of 1.3967 and off its 1.3187 highs.
Brexit headlines are offering shirt term scalping opportunities while the dominant theme is back to Central Banks following the RBA, BoC and ECB this month so far. Next up will be the RBNZ expected to join the dovish chorus which is making for blue skies for the greenback. "Globally, the softer outlook in the euro area will weigh on monetary policy considerations outside the bloc," analysts at ANZ Bank explained, keeping with the theme of central banks. ANZ is expecting the RBNZ to cut in November, with two to follow.
BoE to breakaway?
As far as the BoE goes, Brexit is a stumbling block but a breakthrough on the backstop hold up could make way for a sharply higher pound, especially given the likelihood that the BoE will be back on the tightening agenda.
Overnight, the pound fell from a high of 1.3185 in Asia and was weak all day. The dollar has been firm in its own right while Brexit talks have not yielded any results.
The European Union has so far refused to provide concession on the Irish Backstop but there were some headlines that a new offer could come from the EU with respect to the backstop. However, there are doubts that the offer will fall short of what Britain has demanded.
- EU said to await UK response on new Brexit offer.
- It goes further than concessions outlined in a letter in January.
- The EU proposal focuses on bolstering a review system that's already set out in the deal.
Next key events:
We will have Fed's Powell speaking tomorrow as well as nonfarm payrolls. Powell will be speaking Friday about monetary policy normalization at the Stanford Institute for Economic Policy Research Economic Summit, in California, at 8:00PM ET.
GBP/USD levels
The spike on Brexit headlines was indeed shortlived and the price is falling back away from the 21-hr SMA and hourly cloud base where trend line resistance/100-hr SMA confluence acts as a higher resistance. Bears are now below 1.3081 and now eye a break below the 50% Fibo of the mid-Feb swing lows to late Feb swing highs located here (1.3060s) as the last defence for a break to the 61.8% of the same range down just below 1.30 the figure.
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