How Will Brexit Affect GBPUSD Ahead of the March 29 Deadline?

TL;DR

Brexit headlines created substantial GBPUSD volatility, and the analysis favors downside toward 128.81 if cable closes decisively below 130.00. A recovery into the 132.00 to 132.50 resistance area could offer a short entry, while a close above 133.00 raises the risk of a move toward 135.00. Read on for the key levels, trade setup, and risk warning.

Transcript

hello it's good to be back once again today I would like to discuss the cable I think it would be a more interesting currency pair because the the brexit headlines at the end of march is looming and there has been a lot of volatility on cables so I think that's a it'll be great to trade Sterling to reap the distillate out swings in the next couple ... Read More

Key Insights

• 🚠 Brexit headlines have contributed to the volatility in the cable currency pair.
• 🈷️ Cable reached a 21-month high in April 2018 but fell to a 20-month low at the start of 2019 due to Brexit concerns.
• 😮 Short covering in sterling led to a rise in cable to a 3-month high at 133.51.
• 🍳 The analysis suggests a potential temporary top at 133.51, with downside potential to 128.80 if cable breaks below 130.00.
• 🙃 The maximum upside potential for sterling ahead of the March 29 deadline is limited to around 135.00.
• 🧑‍🌾 Non-farm payroll data before the deadline can add excitement and potentially impact the cable.
• ✋ Traders are advised to place stops to manage risk in case of unfavorable market movements.

Questions & Answers

Q: How could Brexit affect GBPUSD ahead of the March 29 deadline?

Brexit concerns and headlines were driving substantial volatility in GBPUSD. The analysis expected further swings in sterling during the weeks leading to the March 29 deadline.

Q: Why did GBPUSD fall after April 2018?

Cable reached a 21-month high at 143.77 in April 2018, then fell sharply as Brexit concerns intensified. It reached a 20-month low at 124.12 on the first trading day of 2019.

Q: Why did sterling rise to 133.51?

The rise followed substantial short covering in sterling across the board. Cable consequently reached a 3-month high at 133.51 before retracing part of its 3-legged rise from January.

Q: Has GBPUSD formed a temporary top at 133.51?

The analysis considers 133.51 a probable temporary top. A decisive break or close below 130.00 would add support to that view.

Q: What is the downside target if GBPUSD closes below 130.00?

A decisive close below 130.00 would indicate downside potential toward 128.81. That level represents the 50% retracement of the 3-legged rise from 124.12.

Q: What GBPUSD level could hold below 128.81?

The analysis identifies 127.73, February's low, as a level expected to hold. This view accompanies the downside target around 128.80 to 128.90.

Q: What GBPUSD trading strategy does the analysis recommend?

The recommendation is to short sterling if it recovers into the 132.00 to 132.50 resistance area. The proposed target is the 128.80 to 128.90 area, with stops used to manage the risk of being on the wrong side of the market.

Q: What would invalidate the bearish GBPUSD outlook?

A close above 133.00 would increase the risk of sterling moving higher toward 135.00. The analysis considers 135.00 the maximum upside potential before the March 29 Brexit deadline, while noting that non-farm payroll could add volatility beforehand.

Summary & Key Takeaways

• Definition: Cable refers to the GBPUSD currency pair discussed in relation to Brexit headlines.

• Number: Cable reached a 21-month high at the 143.77 price level in April 2018.

• Number: Cable fell to a 20-month low at the 124.12 price level on the first trading day of 2019.

• Number: Short covering helped sterling reach a 3-month high at the 133.51 price level.

• Step 1: Watch for a recovery into the 132.00 to 132.50 resistance area.

• Step 2: Consider the short setup targeting the 128.80 to 128.90 price area.

• Compare: A close below the 130.00 price level supports downside, while a close above 133.00 raises upside risk.

• Number: The downside objective is the 128.81 price level, the 50% retracement of the rise from 124.12.

• Number: February's low at the 127.73 price level is expected to hold.

• When: The 135.00 price level is presented as maximum upside before the March 29 Brexit deadline.

• Tool: Use stops to manage risk if the market moves against the position.

• When: Non-farm payroll arrives before the March 29 deadline and could bring additional volatility to cable.