Brexit
Ongoing Brexit negotiations affected the GBPUSD this year. As we enter the final stage of discussions, the chances are that we will have an explosive reaction on the GBP pairs.
This week is key for the parties involved. Should the UK go ahead with the Internal Market and Finance Bills this week, then a deal between the two parties is literally impossible. Financial markets so far reacted by buying or selling the pound on a deal, no-deal scenario. For instance, think of the EURGBP this week. It opened at 0.90, rose a hundred pips yesterday, only to come back to the breakout point.
Or, the GBPUSD pair. It made a new high on Friday after the NFP report, only to drop two big figures on Brexit developments on Monday.
With Brexit still an issue, any trade on the GBPUSD is susceptible of wild moves. The market may easily make a new high or literally collapse depending on how the negotiations end.
From a technical perspective, the GBPUSD made a rising wedge recently. Yesterday’s move broke the wedge; the market retested the rising trendline and now sits at dynamic resistance. Bears may want to sell against Friday’s highs, targeting the full retracement of the wedge. This way, a risk-reward ratio bigger than 1:2 is obtained.
