Short Seller Steve Eisman Selling Two U.K Bank Stocks On Brexit Standoff

Brexit continues to cause jitters and concerns in the markets. However, some investors have sensed a window of opportunity that they are slowly taking advantage of. Steve Eisman believes that now is the right time to short two U.K banks as expectations of the U.K leaving Europe without a deal soars.

Eisman Short Stance

According to the Neuberger Berman Group money manager, the U.K is one of the biggest risks. While the high profile short seller expects the U.K government to agree to an exit deal, he remains pessimistic of parliament approving the deal. Eisman has also warned that he could short other stocks should Jeremy Corbyn become the next prime minister.

“I’m shorting two stocks in the U.K., but I’ve got a screen of about 50, and I might short all 50 if I think Jeremy Corbyn is going to be prime minister. Corbyn’s a Trotskyite. Now I know my Trotskyites well, and I know you don’t want to be invested in the U.K. if a Trotskyite is a prime minister,” Eisman said.

Eisman made a name for himself on predicting the collapse of the subprime mortgages as the financial crisis was just but starting. He now believes that the two unnamed banks would pay a hefty price on the U.K exiting the trading block.

While he is yet to give clues of the banks he is shorting, it is becoming increasingly clear that Metro Bank Plc. and CYBG Plc. could be the two unnamed banks. The two banks have continued to attract immense short selling pressure. The total number of shares shorted at Metro currently stands at 7.9% nearly double the ratio at CYBG.

Early in the year, Eisman did recommend shorting Deutsche Bank AG Shares over concerns about profitability issues at the German lender. The short seller has also raised concerns about the bank’s capital levels which he believes are quite low and may force the bank to raise some money next year. Canadian financial companies, as well as Wells Fargo, have also attracted short selling recommendation from the high profile investor.

Brexit Stand-Off

Five months to the deadline, Britain is yet to reach a deal with the European Union on how to go about Brexit. Negotiators are in heated discussions as both refuse to budge from their tough stance. Uncertainty as to whether or when Britain will reach an agreement appears to be fuelling concerns especially in the market.

The pound has come under immense pressure in recent weeks and continue to lose ground against the majors. More than 70 business leaders under the Lastminute.com umbrella have already signed a letter arguing potential ramifications on companies, on the U.K failing to reach an agreement.

Separately Eisman has reiterated he remains short on Tesla stock, despite a recent price surge. Tesla stock has experienced wild price swings in recent weeks in the wake of CEO, Elon Musk failing on his bid to take the company private. The stock did plunge below the $280 a share level. However, it has since bounced back on exceeding expectations with a stellar third quarter financial report.

GBP Way for the Upcoming Days

In the middle of August, the British pound got a boost to turn the downtrend. And it seemed that despite uncertainties around the Brexit deal, negative forecasts for the UK economic growth, the GBP found a strength to rise. However, up to now, risks that the downtrend has resumed have been increasing.

Source of the chart: FINANCIAL TIMES
Source of the chart: FINANCIAL TIMES

Why the GBP is under pressure?

In the middle of September, the appreciation of the British currency stuck. It’s clear that the Brexit deal is the main driver of the British currency and recent negative events related to the Brexit pulled the GBP down.  What is more, the end of the Brexit isn’t close. As a result, traders are curious whether the GBP will be able to recover or not.

On Monday, October 29, UK finance minister Mr. Hammond delivered the budget. Although comments were optimistic: the minister announced an end of the austerity, predicted the economic growth and real wage growth, which is highly positive for the GBP in the long-term, the GBP wasn’t encouraged.

It means that the market keeps worrying about the impact of the Brexit deal. Until it sees confirmations of the soon disposition of the issue, neither strong economic data nor positive comments on the economy will boost the GBP.

But does it mean that the British currency won’t get a chance to recover at least in the near term?

What to expect in the upcoming days?

Let’s start with the GBP/USD pair.

The plunge of the GBP was caused also by the strengthening of the USD. The US dollar index has reached the August highs.

Traders are waiting for the Super Thursday. The Bank of England will release the interest rate. Of course, the market doesn’t anticipate any changes to the rate, however, it will try to catch the mood of the central bank. If the BOE is optimistic, the GBP will be supported.

However, on Friday the US will release the jobs data. NFP will make the USD highly volatile, but at the same time, it may help the index to gain a foothold on August maximums.

What levels should we expect?

On the daily chart, the price formed a double top pattern. The neckline at 1.2920 was broken on October 24 and as a result, the pair kept falling. However, on October 30 the pair reached the target at 1.27 and rebounded.

Up to now, we have a question: for how long the pair may rise?
Technical indicators don’t give strong signals. RSI is near to cross the 30 level bottom up, it reflects the upward movement of the pair. But the further rise may be limited.

An increase of the GBP will depend on the mood of the central bank. Hawkish Mr. Carney will push the currency up.  The resistance will lie at 1.2895 and only the weakness of the USD will pull the pair to 1.3016.

At the same time, we should remember another scenario. The pessimistic BOE and the strong US jobs data may pull the pair back to 1.27.  Moreover, negative comments on the Brexit deal will affect the currency as well. A break of 1.27 will provoke a fall to April lows at 1.2584.

GBP/USD Daily Chart
GBP/USD Daily Chart

GBP:
Nov 1: BOE Meeting, Manufacturing PMI

Nov 2: Construction PMI

USD:

Nov 1: ISM Manufacturing PMI

Nov 2: NFP

Does the GBP have more chances against the EUR?

The euro has been suffering as well. The most recent event that pulled the euro down was comments of Angela Merkel about her stepping down as a chancellor in 2021. Italy’s budget issue is still a threat to the euro’s rate. However, looking at the chart of EUR/GBP, we see that the British pound is weaker than the EUR.

Events to look at:

On October 31, the pair managed to rebound from the resistance at 0.8791. The RSI indicator is near to cross the 70 level upside down that signals about the downward movement of the pair.

The further direction of EUR/GBP will depend on the BOE statement and the ability of the euro to recover. In the case of the pessimistic mood of the BOE and negative economic figures, the pair will be able to break above 0.8921. The next resistance is at 0.8958.

However, if the euro doesn’t gain momentum and traders consider the BOE statement as positive, the pair may go to the support at 0.8860.

EUR/GBP Daily Chart
EUR/GBP Daily Chart

GBP:
Nov 1: BOE Meeting, Manufacturing PMI

Nov 2: Construction PMI

EUR:
Comments on Italy’s budget

Making a conclusion, we can say that the GBP has a chance to rise. However, in the upcoming day, comments on the Brexit deal, the mood of the BOE, strength of the USD and European news will affect the moves of the GBP/USD and EUR/GBP pairs. Follow the economic calendar and the news to be sure in the further direction of the GBP.

The Big Short – Is It Coming Now?

It’s been a particularly interesting few weeks that culminated in some particularly newsworthy events over the last week with the choppy waters being the beginnings of a storm that has been brewing since Trump’s November 2016 Presidential Election victory.

For the market, analysts looking for key drivers over the near-term that will ultimately decide the fate of a number of currencies, economies and ultimately whether a new crisis dawns.

Looking at current market conditions:

  • 10-year Treasury yields have hit their highest level since 2011, largely thanks to FED Chair Powell who talked up the U.S economy, supporting the FED’s projected rate path, with yields holding in spite of slightly softer September inflation numbers, as the annual core rate of inflation holds above the FED’s 2% objective in September.
  • Economic indicators out of China had suggested that the ongoing trade war with the U.S had begun to bite. September’s trade figures released on Friday showed a record trade surplus, a perplexing set of figures when considering the downward trend in manufacturing PMI numbers that will have Trump scratching his head.
  • Corporate earnings season is kicking in. Rumblings from corporate America, over the effects of the U.S tariffs on Chinese goods and China tariffs on U.S goods, has already begun and could rile the markets further. The effects of the trade war may well be reflected in a number of earnings figures in the coming weeks.
  • President Trump’s decision to add the FED to his ‘Blacklist’ is another cause for concern as the influence from the Oval Office reflective of just how bad things could get as the cost of borrowing rises and profit margins shrink. It’s not surprising that the U.S President wants the FED to hit the brakes, the effect of Trump’s tariffs on margins and rising borrowing costs a bad combination all around.
  • All things considered, the IMF bided its time in throwing in downward revisions to growth forecasts. Last week’s revisions for this year and the next are another reason for the markets to be edgy going a week full of possibility.
  • Moving over to Europe, the Italian coalition government’s budget plans have got the European markets up in arms, contributing to a jump in Italian government bond yields and a material widening in the spread between Italian and German yields that has caught the attention of many, with 400 the line in the sand.
  • Over in the UK, it’s been a rollercoaster of a ride for the British Government as the EU’s stance on Britain and its departure from the EU took a turn for the better from a UK perspective. The shift comes in spite of some harsh words from pro-EU French Prime Minister Macron and talks of blocking Le Tunnel and more should no deal be reached. How events unfold will have a material impact on, not just for the UK, but the EU and the global economy. In spite of some rather bizarre views that a collapse in the UK economy would have little to no effect on the EU and beyond, let’s just consider the fact that the UK economy is the world’s 5th largest, sitting below Germany and above France.

So, what could possibly go wrong?

The Establishment could flex its muscles on Monday and reject Italy’s budget, spreads between Italian and German government bond yields would certainly breach 400 and we can wave goodbye to the FTSE MIB, with contagion risk likely to weigh on European assets, driving demand for U.S Treasuries and German government bonds.

An Italian Referendum on membership with the EU? Now that would be interesting when considering the result of the last election…

In the UK, make or break talks between the UK Government and the EU could end in tears, reigniting the possibility of a no-deal that would see the Pound take a tumble.

And of course, the U.S President could ramp it up against China with the allegations of China spying on the U.S through computer chips making China enemy #1, a stark contrast to Trump’s early days in office and his decision to meet the Chinese Premier before any other.

Corporate America delivers early on what many expect to be an eventual shift in earnings, reflective of the effects of trade tariffs and rising borrowing costs, the combination of which is certainly not going to help wage growth.

If that’s not enough, then there’s Iran simmering away in the background and Russia riled by fresh sanctions. Argentina, Turkey, and other emerging markets’ currencies weigh on the global economic stability. If there was ever a time for a great divide, it seems as though it would be now, China, Russia, Iran and Turkey on one side and the U.S on the other, everyone else in the middle and needs to pick a side.

Trump wants to go it alone and if he manages to hold on to both houses in November, could be the U.S against the rest?

Taking a deep breath, the stars will really need to be aligned for the markets to get through unscathed.

Looking at the asset classes…

With the global equity markets in retreat and forecasts for corporate earnings less rosy than the previous quarter, it may well be time for some cream to come off the top, which could finally topple the S&P500, the Dow and in particular the NASDAQ that has outperformed the pair through the year. Expect the broader market to follow…

The EUR, European equities, and the FTSE MIB, in particular, are in the hands of Italy and Brussels… Greece and the Syriza caught the markets’ attention back in 2015. Was that the warm-up act for the main event?

Make or break for the Pound this week, as Theresa May and the team look to resolve the Irish border issue and close out a deal that would need to include a favorable trade deal. Will it be $1.40 or $1.20? The last time there was a bet on the Pound, it was a bloodbath…

Gold has finally found some support in spite of the current yield environment, a 2.2% gain for the current month an indication in itself of just how much of a knife’s edge the market is on.

It’s looking like a big short, it feels like a big short and the street is talking about a big short…

Important CHF Pairs’ Technical Update: 19.09.2018

USD/CHF

A month old descending trend-line, at 0.9685, is likely to challenge the USDCHF’s short-covering moves from 0.9600, if not then the pair’s rise to 0.9710 and the 200-day SMA level of 0.9740 seem imminent. However, the 0.9780-90 area could restrict the pair’s upside past-0.9740, failing to which might propel prices to 0.9850-55 and the 0.9900 resistance-levels. Meanwhile, the 0.9600 and a downward slanting support-line, at 0.9580 now, can limit the quote’s immediate declines. In case the pair refrains to respect 0.9580 mark, the 0.9560, the 0.9520 and the 0.9430 are expected following supports to observe.

EUR/CHF

EURCHF is also heading towards the five-week long resistance-line mark of 1.1315, which if broken could escalate the pair’s recovery to 1.1360 and the 1.1400 numbers to north whereas 1.1415 and the 1.1455 might question the buyers’ strength afterwards. Assuming the pair’s successful trading beyond 1.1455, the 1.1500 and the 1.1555-60 may gain market attention. If the aforementioned TL pushes the pair downwards, the 1.1260 and the 1.1220 can come-back on the chart. Also, pair’s extended south-run below 1.1220 may make the 1.1180 and the 61.8% FE level of 1.1110 as sellers’ favorites.

GBP/CHF

Unlike previous two CHF pairs, the GBPCHF has one more barrier, namely the 50-day SMA level of 1.2800, to surpass before confronting the decisive trend-line, viz.1.2840. If at all the pair manage to clear the 1.2840 hurdle on a daily closing basis, the 1.2900, the 1.2980 and the 1.3000 may offer intermediate halts during its rise to 200-day SMA level of 1.3025. Alternatively, the 1.2600 and the 1.2550 cab be considered as adjacent rests if the pair takes U-turn from present levels, breaking which 1.2470-60 horizontal-area comes into play. Should Bears continue ruling momentum beneath 1.2460, the 1.2350, the 1.2265 and the 1.2215 may flash in their radars to target.

CAD/CHF

Break of nearby TL can’t be taken as a sign of CADCHF’s strength as another resistance-line, at 0.7500, and the 0.7515-20 zone, are still standing tall to threaten the Bulls. Given the prices keep advancing above 0.7520, the 0.7565, the 0.7585 and the 0.7600 can be aimed if holding long position. On the downside, the 0.7435, the 0.7400 and an ascending support-line, around 0.7375, could curb the quote’s immediate declines. Though, pair’s drop below 0.7375 has to conquer recent low near 0.7310 in order to test the 61.8% FE level of 0.7280.

GBPUSD with a nice bearish setup

One of the best setups at the beginning of the week can be found on the GBPUSD. The pair is on the back foot and the main reasons for that, from the fundamental point of view, are the weaker PMI number and the new comments from Mr. Barnier regarding Brexit. This comes in line with the technical analysis, which was giving us a sell signal as early as on Friday.

As You can see, at the end of the last week, Cable bounced from a combination of two important resistance. First one was the horizontal one, which played an important role on the November 2017 and June/July 2018 (red, 1.303). The second one was the down trendline, which connects the lower highs since May (blue). In addition to that, the recent bullish correction was shaped as a flag, which is promoting a further drop. Today, price breaks the lower line of the flag and the short-term horizontal support on the 1.293 (green). That is a legitimate trigger to go short.

GBP/USD Daily Chart
GBP/USD Daily Chart

The negative signal is on, as long as the price is below the red area. Chances that we will come back above are very low. With this setup and the current momentum, the price should soon reach the new mid-term lows.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

British Pound Steady on EU Offer to Renegotiate Brexit, Global Stocks Retreat

The British pound maintains its position at 1.3020 on Thursday morning after rising by 1.2% from 1.2870 on Wednesday on the softening tone of the EU in the negotiations about Brexit. The chief negotiator from the EU suggested maintaining close ties with Britain, although outside the single market. These comments provoked the sharpest strengthening of the pound in 7 months by pulling the dollar index downwards. Technically, GBP/USD pair is now vulnerable to some correction after such a strong growth.

Canada’s Prime Minister Trudeau claimed that he had hoped to make a deal on the NAFTA by Friday. Although Canada is not hastening to surrender the important points of the agreement, the parties demonstrate their good will to find agreement. The Canadian dollar continues to rise on expectations that the moment of the greatest uncertainty was left behind.

American S&P500 fixed another update of historical highs on Wednesday, rising by 0.5% to 2915. On Thursday morning, the futures on S&P500 lose about 0.2% due to increased caution of investors and negative dynamics of Chinese bourses.


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The Hong Kong Stock Exchange index has lost 1.2% since morning. Investors are concerned that the date of tariff expansion by the US for Chinese goods over $200 approaches as early as next month. At the same time, the level of negotiations does not allow to hope that these tariffs might be avoided.

The expansion of trade restrictions threatens to slow down China’s economy, which also has a negative impact on positions of the Australian and the New Zealand dollars. These currencies have returned to a decline, not being far from its 1.5 and 2.5-year lows, respectively.

Due to the weakening of commodity currencies and sluggish euro dynamics in the morning, the dollar index played the loss of the previous day, bouncing from its 4-week lows. Despite the weakening earlier this week, the U.S. currency retains a significant potential to strengthening through the increased investors’ nervousness around the prospects of developing and commodity economies in case of a significant slowdown in China.

This article was written by FxPro

Three great setups for Forex Bears

Yesterday and today, EURAUD is climbing higher but just to test the super important horizontal resistance. EURAUD met a combination of three crucial elements. First one is the upper line of the bearish flag formation. The second one is the horizontal resistance, which previously, for many weeks was a support and the third one is the mid-term down trendline. According to the price action rules, the price should continue to go down.

Next one is the AUDJPY, where on the daily chart, the price broke the crucial horizontal support. The beginning of the week brings us a small reversal but in our opinion, it is just a typical pull-back and a previous support is being tested as a closest resistance. As long as we stay below the grey area, the sentiment is negative.

GBPCHF is having a very strong bearish setup on the weekly and daily chart. Here, the price is coming back to the main downtrend after being locked inside of the flag pattern. We already broke the lower line of the flag and the horizontal support on the 1.287. The sentiment is definitely negative.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

Important CHF Pairs’ Technical Outlook: 25.07.2018

USD/CHF

Unless breaking seven-week old ascending trend-line, at 0.9890 now, the USDCHF is less likely to extend its recent pullback towards 0.9850 and the 0.9820 support-levels. However, pair’s dip beneath the 0.9820 isn’t a sure signal for its plunge as 0.9780-90 horizontal-region, followed by the 200-day SMA level of 0.9750, may still challenge the sellers. On the contrary, the 0.9955 and the 0.9990 can entertain short-term buyers of the pair, breaking which there are multiple resistances between the 1.0035-70 area to watch. In case prices rally beyond 1.0070 on a daily closing basis, the 1.0100 and the 61.8% FE level of 1.0175 may appear in the Bulls’ radar to target.

EUR/CHF

Alike USDCHF, the EURCHF’s downside is also capped by the immediate support, herein it is the 1.1595-85 zone, that may trigger the pair’s U-turn towards nearby TL resistance figure of 1.1615. Should the quote surpasses 1.1615 barrier, it can rise to 1.1640 and then to the 1.1655-60 whereas 1.1680 and the 1.1715 may question the pair’s additional strength. If at all the pair refrains to respect the 1.1595-85 support-zone, the 1.1550 and the 1.1500 can mark their presence on the chart. Also, pair’s successful trading past-1.1500 can highlight the importance of the 1.1475, the 1.1460 and the 1.1365 supports.

GBP/CHF

GBPCHF’s recovery from nine-month old ascending trend-line may support the pair to aim for the 1.3125 and the 50-day SMA level of 1.3165 but a downward slanting TL stretched since April can confine its further upside around 1.3210. Given the pair’s D1 close above 1.3210, the 1.3270 and the 100-day SMA level of 1.3335 may please the optimists. Meanwhile, the 1.3020 can offer rest to the pair’s adjacent downturn, breaking which the 1.2970 trend-line could grab investor attention. Though, break of 1.2970 on a daily closing basis can make the pair vulnerable enough to plunge towards the 1.2910 and the 1.2850 supports.

CHF/JPY

Even after reversing from 111.70, the CHFJPY’s up-moves may soon struggle to conquer the 112.15-20 horizontal-resistance, which if broken could escalate its rise to confront the 112.60 and the 113.00 hurdles to north. Let’s say the pair manage to clear the 113.00 mark, then it can rally to the 113.25 and the 113.65, comprising 61.8% FE, resistance-levels. Alternatively, the quote’s dip below 111.70 may avail the 111.35 trend-line as a point to take a U-turn, failing to which can drag the pair to 111.00 and the 110.60 numbers. Should prices keep declining post-110.60,  the 110.30 and the 109.75 may act as buffers during its south-run to 109.00 round-figure support.

UK Inflation Eases, Pound Continues to Fall on Disappointing Retail Sales

Data from the UK saw the release of the inflation figures. Consumer prices in the UK were seen rising at a slower than expected pace of 2.4%. The median forecasts expected a print of 2.6%. Core inflation was also seen slowing, rising at a pace of 1.9%.

The UK’s retail sales figures dropped unexpectedly in June. Sales declined by 0.5% in June compared to a growth of 1.4% in May. YoY Retail sales grew by 2.9, below analysts expectation of 3.7%. Pound hits a 10-month low near 1.30 versus the US dollar.

In the Eurozone, headline inflation increased by 2.0% as estimated by the preliminary inflation report but core inflation rate was seen rising at a pace of 0.9%, which was slower than the preliminary estimates of 1.0%.

Data from the U.S. showed that building permits increased 1.27 million missing estimates of 1.33 million while housing starts also moderated at a pace of 1.17 million.

Earlier in the day, Australia’s jobs report showed that the unemployment rate held steady at 5.4%. The employment change surged, rising 50.9k during the month, beating estimates of 16.7k.

In the U.S. trading session, the Philly Fed Manufacturing index is expected to rise to 21.6. FOMC member Quarles will be speaking later in the afternoon.

EURUSD intra-day analysis

EUR/USD 4H Chart
EUR/USD 4H Chart

EURUSD (1.1650): The common currency was seen falling to intraday lows of 1.1606 before recovering toward the end of the day. The EURUSD closed on a bearish note and the consolidation near the 1.1606 level continues. The main resistance level is seen at 1.1730 and the currency pair is expected to maintain its range within these levels. A breakout above 1.1730 resistance could signal near term gains toward 1.1846 – 1.1824 in the short term.

USDJPY intra-day analysis

USD/JPY 4H Chart
USD/JPY 4H Chart

USDJPY (112.71): The USDJPY currency pair was seen easing back following the rally toward the 113.11 handle. Price action on the daily chart closed with a doji which comes near the top end of the rally. A bearish close today could potentially signal a near term pull back in prices. Support at 112.28 remains the key level of interest in the short term. A breakout below this level could signal further declines to the next main support level seen at 111.13.

XAUUSD intra-day analysis

Gold 4H Chart
Gold 4H Chart

XAUUSD (1224.43): Gold prices were seen extending the losses on the day as price action fell just short of the 1219.74 level of support. Despite pulling back to close the day flat, early trading today suggests a renewed decline in price action. The Stochastics on the 4-hour chart indicates a higher low which could signal a near term rally to the upside. Gold prices are expected to pull back toward 1242.25 level where resistance is likely to keep a lid on the gains.

This article was written by Orbex

Pound Falls on Brexit Concerns, UK Inflation Rate Hike in Doubt after Inflation Data

The U.S. dollar was seen posting strong gains on Tuesday. The rebound came amid the U.S. industrial production rising 0.6% on the month. The Fed Chair Powell started his two-day testimony to the U.S. Congress. In his testimony, the Fed Chair maintained the hawkish rhetoric that the central bank should continue tightening monetary policy.

Elsewhere, the UK’s monthly jobs data showed that the unemployment rate remained at 4.2% while the average earnings increased 2.5% matching estimates but slower than a revised 2.6% from the previous three months.

The British Pound continues its fall on Wednesday morning, trading at 1.3087, down 0.18%. The pound falls on reports that Theresa May could face a defeat on the latest Brexit Vote.

The UK’s Office for National Statistics released the inflation report today. The data showed an increase of 2.4, below economists expectation of 2.6 which put August rate hike in doubt.

Core inflation rate is expected to rise 2.1%, the same pace as the month before. Data from the Eurozone will see the final inflation figures. Headline consumer prices are expected to rise 2.0% while core inflation rate is tipped to rise at a pace of 1.0%.

The Fed Chair Jerome Powell is expected to continue with his second day of testimony to Congress.

What is your knowledge like on economic data releases and how they affect the market? Learn more!

EURUSD intra-day analysis

EUR/USD 4H Chart
EUR/USD 4H Chart

EURUSD (1.1654): The EURUSD currency pair was seen stalling near the resistance level of 1.1730 and turned lower on the day on Tuesday. Price action was seen giving up the gains made from Monday and the daily chart’s bearish engulfing pattern is likely to suggest some downside. On the 4-hour chart, the declines could push the EURUSD currency pair lower toward 1.1600 level where support could be formed. However, with the Stochastics on the 4-hour chart turning to the oversold level, we could expect to see a reversal in the currency pair.

USDJPY intra-day analysis

USD/JPY 4H Chart
USD/JPY 4H Chart

USDJPY (112.93): The USDJPY currency pair was seen rebounding off the support level at 112.28 and rallied to fresh highs on Wednesday. Price action, however, remains doubtful near the current top with the Stochastics on the 4-hour chart posting a lower high. Another leg in the decline is expected. The sharp gains in the currency pair could see a minor correction back to 112.28. In the event that this level fails to hold the declines, we could expect to see the steeper correction toward 111.13.

XAUUSD intra-day analysis

Gold 4H Chart
Gold 4H Chart

XAUUSD (1228.01): Gold prices were seen falling to a fresh 12-month low on Tuesday. Price action is currently consolidating after slipping to lows of 1226.14. Further declines could push the price of the precious metal down to 1219 level which is another major support level that could be tested. To the upside, any gains are likely to be limited to the 1242 handle.

This article was written by Orbex

Pound Unable to Go up

The pound sterling has been trying to strengthen over the last few days but has not succeeded so far. The major fear of the pound traders lies in Brexit negotiations which are paused or disputed every now and then. Besides, the market has not yet fully recovered after Donald Trump’s speech, where he said that too mild Brexit may damage the relations between the UK and the US.

Now, investors’ attention is driven to the fundamentals. Today’s job market data were quite neutral, so the pound is still uncertain and waiting for more news to come.

Jobless claims in the UK rose by 7,800 against the expectations at 2,300 and the previous number of 7,700. It looks like this summer is not the best season for British business, which is quite a strange thing. Meanwhile, the unemployment rate remained unchanged at 4.2$, quite in line with the expectations, while the average wages per three months rose by 2.5%, also meeting the expectations.

Thus, the fundamentals are just okay, without being able to act as a driver. At the same time, investors watch the Brexit closely, and all those news are rather fearsome or just negative. The UK has about 6 months left to arrive to an agreement with the EU; after March 2019, the transitional period will start, and while May and her advocates want it mild, some criticize this approach. Nobody knows what will happen next, and this is what the pound traders are scared of.

Technically, GBPUSD is uptrending, perhaps this is a reversal after a long fall. After breaking out the latest descending channel, the price formed an initial ascending channel. Then, the price hit the new channel’s support and went down to the projection channel, but there it failed to make a new low, just testing the broken out resistance area. Currently, there’s an ascending impulse forming inside a wide uptrend channel, with the support at 1.3110. The target could be at the major channel resistance, which is $1.3420.

GBP/USD 4H Chart
GBP/USD 4H Chart

This article was written by Dmitriy Gurkovskiy, a Chief Analyst at RoboForex

Reversal on the USDCHF?

The new week starts for the USD on the back foot. The Greenback is loosing almost on every front. First troubles we could have seen already on Friday, so Today we do have a continuation of the movements that happened at the end of the last week.

One of the most technical setups can be seen on the USDCHF, where Friday ended with a bearish shooting star pattern. The place, where this pattern is present is not random as it is a long-term horizontal resistance (orange). In the smaller time frames, that shooting star is additionally shaped like the head and shoulders formation, which strengtheners the sell signal. Another bearish factor here can be the false breakout of the green horizontal resistance but for that, we need to see the USDCHF to decline slightly more than now. If You are still not convinced to go short, you can wait for the breakout of the long-term up trendline. Price closing below the black line will be a super strong sell signal.

USDCHF Daily Chart
USDCHF Daily Chart

As for now, the green support holds, which is a short-term positive factor but in my opinion, that area should be broken soon and sellers will finally have an occasion to make some money on this instrument.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

UK Politics in Turmoil, What’s Next?

The Macro Perspective

The UK narrowly voted to leave the European Union in 2016, by a vote of roughly 52% to 48%. Given that mandate, the UK government (and the whole nation) has since been divided into the “hard Brexit” and “soft Brexit” camps, with the two sides each trying to get control. It’s generally accepted that between the two scenarios, “hard Brexit” is bearish for Sterling while “soft Brexit” is bullish.

On late Friday, PM May secured an agreement within her cabinet for the direction of Brexit negotiations moving forward. May has always been on the “soft Brexit” side, having actually initially supported the “Remain” movement. The agreement includes among others:

• A “Mobility framework” to be set up which will allow UK and EU citizens to travel, study & work in both areas.
• A “Common rulebook for all goods” within the EU, including agricultural products. The UK will apply domestic tariffs & policies for goods intended for the UK, but charge EU tariffs for goods that end up heading into the EU.
• “Co-operative agreements” to be established between UK & EU competition regulators.
• A “Joint institutional framework” when it comes to courts of justice (done in the UK by UK courts, and in EU by EU courts).

We must note that this agreement is just the UK’s preferred way of moving forward. It still needs to be reviewed and agreed by the EU, and it’s merely the first small step towards reaching an agreement between the UK and EU. If the EU reject this proposed agreement then we will be back to square one, but until then we should treat this as a positive development.

David Davis, the head of Brexit negotiations, was always considered to be more on the “hard Brexit” side (as was his deputy Steve Baker). As a result of this cabinet agreement – and the other side effectively taking control of the process – Davis resigned along with his deputy. This move has been characterized as a “hammer blow” for May, and generally a very negative event, but it was practically unavoidable following the cabinet vote – so we don’t think it should be a big surprise. Davis is replaced by Dominic Raab, a pro-Brexit supporter, and former housing minister. He seems to have good support from May and the cabinet, and we now need to wait and see what his approach is.

As if the above developments weren’t enough, we saw yet another important move on Monday as Foreign Secretary Boris Johnson also resigned. Johnson had also been a vocal advocate for a “hard Brexit”, constantly claiming that the UK would need to have a clean break from the EU as dictated by the British people via the referendum. Again, this shouldn’t have been a big shock, and neither should we think that it will be the last resignation within May’s government. As the two camps remain divided and the “soft Brexit” route seems to have been chosen going forward, the “hard Brexit” supporters will likely feel increasingly uneasy with their position.

The big risk will undoubtedly be that May’s slender majority gets eroded and a new round of elections is forced. In such a scenario, what would the most possible election outcome be? Jeremy Corbyn’s Labour party has been slowly gaining ground, but the Conservatives would probably be victorious once again – let’s not forget that for the past 2 years the British people have had an opportunity to further assess the potential “hard Brexit” impact, and it’s quite possible that there has been a realisation that it could be particularly damaging for the UK.

The chances of a Conservative election victory would probably increase substantially if PM May stepped down and a new PM was appointed in her place. In fact, such a move would probably be the best way to restore confidence in the Conservative party after May’s undoubtedly poor handling of the Brexit process so far. Her approval ratings are at all-time lows and she may be forced to make such a move in the very near future. If such a move is made, then the selection of a new leader would be absolutely crucial for them.

Now, where does all this leave us? Let’s think about the two potential scenarios that were always going to be in play: the “soft Brexit” and the “hard Brexit”. What we have seen unfold in the past few days is the beginning of the “soft Brexit” scenario. So, I find it very difficult to turn bearish GBP on the back of what has just transpired, even with the increased political uncertainty.

I remain bullish as the main source of GBP weakness since 2016 has been Brexit uncertainty, and specifically the “hard Brexit” scenario (the BoE has repeatedly stated this in the past year). What we are now seeing is the first step aiming at removing this uncertainty, and this, in my opinion, can only be a positive for the Pound.

Stelios Kontogoulas

The Technical Analysis Perspective

The GBPUSD has retraced nearly 50% of the post BREXIT lows to the highs this spring. The recent double top completed when we traded towards the 1.3050 level and has since bounced higher out of a descending wedge. This is constructive near term as long as we are above the 1.3050 level, but please note we just stopped on the 9th of July at the 24% retracement at 1.3360.

GBP/USD Daily Chart
GBP/USD Daily Chart

This article was written by Forex Analytix

The Pound Continues to Weaken as UK Political Uncertainty Prevails, Global Stocks Rise

The initial move on the Davis resignation was for Cable to rally from 1.33000 up to 1.33500 but news of Johnson’s departure sent the pair down to 1.31940. Jeremy Hunt replaced Johnson as Foreign Secretary, PM Theresa May was quick to right the ship saying that there would be no second referendum on Brexit but that the Cabinet agreed to step up preparations for a “No Deal” scenario. GBPUSD bounced to 1.32690 as reports came in that a no-confidence vote on May’s leadership would not occur.

Elsewhere China and Germany signed a Commercial Accord involving VW, Siemens, BASF and others and committed themselves to multilateral global trade through the World Trade Organisation rules. Chinese Premier Li stressed the need to fight protectionism. The pair also agreed to remain committed to the Iran Nuclear agreement securing Iranian Oil shipments and stabilizing the region. This pushes US President trump further to one side as he is against the Iran Deal and will impose sanctions on companies doing business with the country. Both Germany (and the EU) and China are being hit with US trade tariffs, so for them, this comes as a natural response to US trade disruption. President Trump is to visit the UK later this week, with large-scale protests expected.



Consumer Credit Change (May) came in at $24.56B against an expected $12.50B from a previous reading of $9.26B which was revised up to $10.27B. This time the data beat expectations after coming in under expectations for five months in a row. The beat was nearly double the forecast and shows a considerable pick up in credit taken out last in May. Increases in this metric are a sign of consumer confidence as consumers take on more debt and lenders feel confident issuing loans. USDJPY had little reaction trading close to 110.800.

  • EURUSD is down -0.06% overnight, trading around 1.17422.
  • USDJPY is up 0.25% in the early session, trading at around 111.125
  • GBPUSD is down -0.17% this morning trading around 1.32328
  • Gold is unchanged in early morning trading at around $1,257.47
  • WTI is up 0.32% this morning, trading around $72.96

This article was written by FxPro

UK Monthly GDP Rises to 0.3%, Pound Remains Weak

The British pound was seen losing 0.47% on the day on Brexit related developments. First, the UK’s Chief Brexit negotiator, David Davis resigned which was later followed by the UK’s foreign minister, Boris Johnson resigning as well.

The exit of the two key figures was however seen by many as the UK’s ability to opt for a soft Brexit with the EU.

The release of the UK’s monthly GDP numbers came out slightly above expectation. The UK economy grew by 0.3% in May compared to 0.2% in April.

On the economic front, data was limited on the day. German trade balance was seen at 20.3 billion euro, matching estimates and posting a slight increase from 19 billion euro registered the month before.

Data from the Eurozone is relatively quiet for the most part.

The NY trading session is light with the release of Canada’s housing starts and building permits report.

EURUSD intra-day analysis

EUR/USD 4H Chart
EUR/USD 4H Chart

EURUSD (1.1745): The EURUSD currency pair was seen giving up some of the gains made on Monday. After rallying to intraday highs of 1.1790, the common currency gave up part of the gains. In the near term, we expect the EURUSD to extend the declines toward 1.1688 where support is likely to be established. With price action trading steadily within the rising price channel, we expect to see a short-term correction. A rebound off the 1.1688 support level could trigger renewed upside in price.

USDJPY intra-day analysis

USD/JPY 4H Chart
USD/JPY 4H Chart

USDJPY (111.11): The USDJPY currency pair was seen posting a strong reversal as price action moved back above the resistance level of 110.62. The current gains are expected to hit the previous highs near 111.13. There is scope for price action to post a reversal here as USDJPY could settle in a range within the levels mentioned. A breakout from these levels could trigger the next direction in the currency pair.

XAUUSD intra-day analysis

Gold 4H Chart
Gold 4H Chart

XAUUSD (1259.01): Gold prices extended the gains to hit the 1263 level of resistance. The bullish flag pattern seems to be validated but we expect a near-term pullback. Gold prices are likely to retest the breakout level around 1256. A reversal of this level could signal further upside in price. However, gold prices will need to break out above 1263 resistance level in order to target the 1273.47 region which marks the measured move of the bullish flag pattern.

This article was written by Orbex

Pound Rises after Three UK Government Ministers Resign over the Latest Brexit Proposals

The UK’s Brexit Secretary David Davis has resigned along with two junior ministers, Steve Baker and Suella Braverman, over PM May’s latest softer Brexit proposals that were agreed at a cabinet meeting over the weekend. He said in a statement that his role requires an “enthusiastic believer” in May’s approach rather than a “reluctant conscript”. GBP reacted to the data during a period of lower liquidity with GBPUSD selling off a little from 1.33139 to 1.32846. However, the cable is trading higher on Monday morning at 1.3335, up 0.37%.

The full impact of the move has yet to be priced in with the possibility that PM May now places a more “enthusiastic believer” in the role which could result in a shift in Brexit negotiations going forward. Alternatively, this may result in a no-confidence vote and a leadership contest. All in all, it is shaping up as an interesting week ahead in UK politics.

US Non-Farm Payrolls (Jun) came out with a number of 213K against an expected 195K from a prior 223K which was revised higher to 244K. This measures the change in the number of employed people in June which is up from the forecast with a higher revision. The Unemployment Rate (Jun) was 4.0% against an expected 3.8% with a prior of 3.8%. This measures the percentage of the total workforce unemployed and actively seeking employment during June and is shown to be increasing.  Average Hourly Earnings (Jun) was 0.2% (MoM) and 2.7% (YoY) against an expected 0.3% (MoM) and 2.8% (YoY) from 0.3% (MoM) and 2.7% (YoY) previously. Labour Force Participation Rate (Jun) was 62.9% against an expected 62.7% from a prior reading of 62.7%. This data showed modest improvements and markets reacted positively to the headlines with the US 30 Index moving higher from 24281.90 to 24520.00 and EURUSD up from 1.17164 to 1.17669.



Canadian Unemployment Rate (Jun) was 6.0% against an expected 5.8% from a previous 5.8%. Participation Rate (Jun) was 65.5% against an expected 65.3% from 65.3% prior. Net Change in Employment (Jun) was 31.8K against an expected 24.0K from a prior -7.5K. Unemployment had fallen to the lowest levels in ten years and was settled around 5.8% but has risen 0.2% with this data. The Net Change in Employment data is showing a strong rebound, coming back into positive territory from under zero. Canadian International Merchandise Trade (May) was $-2.77B against an expected $-2.05B from $-1.90B previously which was revised up to $-1.86B. This fell to miss the expected forecast. Overall the report was positive as it showed more Canadians are working. EURCAD moved down to 1.53334 but rebounded higher to 1.54409 after the data was released.

Baker Hughes US Oil Rig Counts was released with a headline number of 863 up from last week’s 858 from 859 previously. Oil prices fell last week after a build in inventories following 3 weeks of bigger than expected draws. WTI Oil can become volatile around this data release and will be in traders’ minds when trading resumes on Monday. WTI finished higher on Friday to close at $72.39.

  • EURUSD is up 0.21% overnight, trading around 1.1773.
  • USDJPY is up 0.02% in the early session, trading at around 110.47
  • GBPUSD is up 0.13% this morning trading around 1.3335
  • Gold is up 0.40% in early morning trading at around $1,263.66
  • WTI is up 0.17% this morning, trading around $73.64

This article was written by FxPro

Technical Update For Important GBP Pairs: 04.07.2018

GBP/USD

Even after bouncing off the 1.3050 support-mark, GBPUSD’s recent recovery still struggles with the 1.3225-30 horizontal-region in order to justify its strength. In case the U.S. holiday & upbeat UK Services PMI manage to propel the pair beyond 1.3230 barrier, the 1.3270 and the 1.3300 are likely following numbers to appear on the chart ahead of highlighting nearly two-month old descending TL, at 1.3335 now. On the contrary, pair’s failure to surpass the 1.3230 hurdle can drag it back to 1.3170 and then to the ascending TL support of 1.3130. If at all the quote drops beneath the 1.3130, the 1.3100 and the 1.3050 can attract market attention as break of which opens the door for the pair’s plunge towards 61.8% FE level of 1.3000.

GBP/JPY

GBPJPY’s latest advances, as portrayed by an immediate upward slanting trend-line, seems helping the pair to again confront seven-week long descending trend-line resistance of 146.25. Should prices clear the 146.25 mark, their surge to 146.65 and to the 147.10 become imminent whereas 147.90-148.00 could challenge the Bulls afterwards. Moreover, pair’s sustained trading above 148.00 can take a halt at 148.15 before targeting the 148.75 and the 149.00 levels. Meanwhile, aforementioned TL, at 145.50, can serve as adjacent rest during the pair’s U-turn, breaking which 144.70 & 144.35 can entertain the sellers. It should also be noted that the pair break of 144.35 can make it vulnerable enough to revisit the 143.70-60 and the 143.15 numbers.

GBP/CAD

With the 200-day SMA aptly playing its role in activating the GBPCAD’s reversal, the pair is likely rising in direction to the 1.7430, the 1.7475-80 and the 1.7570 consecutive resistances; though, 100-day SMA level of 1.7665, near to downward slanting trend-line figure of 1.7685, may confine the quote’s further upside. Let’s say the pair conquers the 1.7685 resistance on a daily closing basis, in that case it can rally to the 1.7800 mark. Given the Canadian Dollar’s strength, mainly due to Crude’s surge, fetch the pair beneath 200-day SMA level of 1.7325 on a D1 basis, the 1.7215 and medium-term ascending trend-line, at 1.7120, are expected rests that it can avail. Also, Bears refrain to respect the 1.7120 TL support can push them to the 1.7040 buffer prior to aiming the 1.7000 round-figure.

GBP/CHF

Following its successful break of near-term descending trend-line, the GBPCHF buyers can target the 1.3180 resistance ahead of looking at the 1.3230 and the 1.3270-75 horizontal-region. If the pair surpasses the 1.3275 hurdle, the 1.3305 and the 1.3365 may mark their presence. Alternatively, pair’s trading beneath the 1.3080 resistance-turned-support can recall the 1.3050 and the 1.3020 before claiming the 1.3000 psychological-magnet. In case the pair extend its south-run below 1.3000, the 61.8% FE level of 1.2945 and the 1.2900 might please the pessimists.

UK Final GDP Revision to Stay Unchanged

The U.S. dollar was seen holding its ground across some of the currency pairs despite the U.S. first-quarter GDP report showing a downside revision. Data from the Commerce Department showed that the first quarter GDP in the U.S. increased at a pace of 2.0% compared to the previous estimates that suggested the economy increased at a pace of 2.2%.

The greenback shed some losses but quickly recovered on the day.

The economic calendar is somewhat busy today with the data from the Eurozone covering the French consumer spending and the preliminary inflation reports. This is later followed by the preliminary inflation figures for the Eurozone.

In the UK, the current account figures are expected followed by the final revised GDP for the first quarter of the year.

Economists polled expect to see no change which could confirm that the UK’s economy grew at one of the slowest paces of just 0.1%.

In the U.S. trading session, the core PCE price index is expected to show a 0.2% increase on the month while personal spending and income are expected to rise 0.4% each.

EURUSD intra-day analysis

EUR/USD 4H Chart
EUR/USD 4H Chart

EURUSD (1.1629): The EURUSD currency pair was seen trading subdued on Thursday but price action quickly gained momentum into the early Asian trading session today. The rebound off the 1.1540 support is expected to see some upside prevailing in the currency pair. In the near term, the EURUSD currency pair is expected to struggle near the resistance level of 1.1730. A breakout above this resistance is required for price action to test the next main resistance level at 1.1846 – 1.1824. To the downside, as long as the current support holds, we expect the currency pair to either trade sideways or biased to the upside.

USDJPY intra-day analysis

USD/JPY 4H Chart
USD/JPY 4H Chart

USDJPY (110.68): The USDJPY currency pair was seen slowing inching higher as price action was seen testing the resistance level of 110.62 once again. A convincing breakout above this level could trigger further gains to the upside. However, we expect to see price action mostly consolidating near the resistance level. While there is scope for the USDJPY to pull back, this could potentially lead to an evolving inverse head and shoulders pattern that could turn bullish for the currency pair. The support at 109.57 – 109.43 remains a key level of interest in the near term.

XAUUSD intra-day analysis

Gold 4H Chart
Gold 4H Chart

XAUUSD (1249.38): Gold prices continued to post the declines as price action was seen briefly falling below the 1250 handle in the near term. This also coincides with price action testing the lower trend line of the falling price channel. In the event of a rebound, gold prices could be seen extending the gains back to the 1263 level where resistance is most likely to be formed. The Stochastics on the 4-hour chart remains a bit overstretched into the oversold levels currently.

This article was written by Orbex

Technical Update For GBP/USD, GBP/AUD, GBP/NZD & GBP/CHF: 21.06.2018

GBP/USD

GBPUSD’s recent U-turn, mainly due to three MPC members voting in favor of a rate-change, seems fueling the pair towards 1.3230-40 resistance-zone and then to the 1.3310 barrier. However, six-week long descending trend-line, at 1.3410 now, could restrict the pair’s further upside, failing to which highlights the 1.3480 and the 1.3550 resistances ahead of challenging the buyers’ strength by 200-day SMA level of 1.3600 and the 1.3610-20 region. In case if the pair can’t sustain latest pullback, the 1.3080 seems immediate support to watch ahead of observing the 1.3030-20 area. Moreover, pair’s continued south-run beneath 1.3020, also clearing the 1.3000 round-figure, could portray its plunge to 1.2920 & 1.2835.

GBP/AUD

Unlike GBPUSD, which returned from supports, the GBPAUD is struggling with important resistances, namely the 1.7900-1.7910 horizontal-zone and 100-day SMA level of 1.7945. Hence, the pair has to provide a daily closing beyond 1.7945 in order to justify its capability in targeting 1.8000 and 1.8050 resistances. Should prices rise beyond 1.8050 then the 1.8130 & the 1.8160 could please Bulls. Alternatively, the 1.7860, the 1.7790 and the 1.7720 are likely adjacent supports that can be availed if the pair fall short of clearing nearby resistances. Though, pair’s break of 1.7720 can help the Bears aim for 200-day SMA level of 1.7595.

GBP/NZD

Even after crossing the 100-day SMA level, the GBPNZD must offer a D1 close beyond 1.9260 if it is to target 1.9320 and 1.9360 resistances. Given the pair manages to successfully trade above 1.9360, the 1.9420, the 1.9460 and the 1.9550 could play their roles as upside hurdles. Meanwhile, the 1.9220 and the 1.9130 may entertain the short-term sellers whereas 1.9000 and the 1.8910-1.8900 could question their power afterwards. Assuming that the pair drops below 1.8900, then it can revisit the 1.8790, the 1.8715 and the 1.8605 rest-points.

GBP/CHF

GBPCHF’s bounce off the upward slanting trend-line stretched since March may soon be challenged by the descending TL resistance, around 1.3200, which if broken can open the door for the pair’s rise to 1.3230, 1.3270 and the 100-day SMA level of 1.3315. If the quote rallies above 1.3315, the 1.3355 and the 1.3425, including 50-day SMA, may appear in optimists’ radars. On the downside, a D1 close below 1.3095 becomes necessary for the pair to meet the 1.3050 and the 1.3000 mark. Additionally, pair’s break of 1.3000 can stretch its downturn to 1.2955, the 1.2915 and the 1.2860 rest-points.

Cheers and Safe Trading,
Anil Panchal

Poor British Statistics Add Pressure on Sterling

The manufacturing industries, strong indicators of economic activity, lost 1.4% during the same period. The growth rate for the last year slowed from 2.9% to 1.8% and 1.4%, respectively. After such disappointing data, Sterling was subjected to a serious sale, losing 0.6% in less than two hours to trade down to the 1.3350 area hitting one-week lows.

Such weak indicators indicate that the UK economy lost growth momentum even without the Bank of England having to raise rates. The earlier reported spike was based on a sharp weakening of GBP after the referendum on Brexit. This effect is now diminishing leaving only negative side effects among them near-record foreign trade deficit. The deficit grew to 14 Billion in April, according to data also published today, which is the second minimum value in history.

Additionally, we saw weak data for the construction activity. After a fall of 2.3% in March, it has only marginally recovered to 0.5% against an expected 2.4%. Following these data releases the estimation of growth of the economy for three months up to May from NIESR did not reach expectations, pointing to a sluggish 0.2% growth.


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It is very likely that this will not be the last of disappointing news from Britain. Tomorrow the markets will pay attention to UK employment data. A series of weak data, including today’s, noticeably reduces expectations from the labor market, but can further pressure the British currency if it fails to present a positive outcome.

This article was written by FxPro