Post Brexit Cable Trade

TL;DR

The extension of Brexit has removed near-term pressures on the GBP/USD currency pair, leading to profit-taking and downside pressure on the pound. The next major support level is 128, while a move above previous highs could indicate range-bound trading.

Transcript

hello my name's Kroger l'm senior market analyst at honda and today we're going to talk about cable the pound versus the US dollar now you may be thinking that this isn't the most necessarily interesting time for this currency pair breaks it is on hold we've got the six-month extension parliament in the UK is in recess for easter so we're not getti... Read More

Key Insights

• 🥺 Brexit extension has removed near-term pressures on GBP/USD, leading to profit-taking and downside pressure on the pound.
• 😘 Technical analysis suggests lower highs, indicating bearish pressure and potential risk to the 130 level.
• 🛟 Major support level at 128 could serve as a significant test for the GBP/USD pair.
• 🧡 Potential range-bound trading if previous highs are surpassed or if the 133 level becomes pressured.
• 🎚️ Dollar strength adds further pressure to the 130 level, potentially increasing downside risk.
• ❓ The movement in the GBP/USD pair remains uncertain, and outcomes can deviate from textbook scenarios.
• 🈷️ The next six months may provide some clarity, but Brexit still remains a significant element of uncertainty.

Questions & Answers

Q: Why is there movement in the GBP/USD currency pair despite the current lack of news flow?

The movement is due to profit-taking following the Brexit extension, which removes near-term uncertainties but also fully prices in current and near-future events.

Q: What can the consolidation into a major support indicate?

Consolidation into a major support, such as the 130 level, could be a potential catalyst for a move lower, as stops may be triggered below this level, exacerbating the downside.

Q: Is a significant downside move expected in the GBP/USD pair?

While Brexit remains a main element of uncertainty, a massive move to the downside is unlikely. The next major support level to watch is 128, which is a historical level of support and resistance.

Q: What would suggest a range-bound trading scenario for the GBP/USD pair?

If previous highs, such as 129 or 131 levels, are taken out, it could indicate a false signal and potential range-bound trading. The 133 level could come under pressure in such a scenario.

Summary & Key Takeaways

• The Brexit extension has provided some clarity and removed near-term pressures on the GBP/USD currency pair.

• Profit-taking is causing downside pressure on the pound, leading to a trade back at the 130 levels.

• From a technical standpoint, lower highs suggest bearish pressure, and a break below 130 could lead to further downside.