Pound retreats as Brexit extension looms

 

Parliament says yes, and no

Boris Johnson’s inability to get anything passed by Parliament, whether his deal or fast-track timetable, has stopped the pound’s rally in its tracks knocking 1.2% off GBP/USD from Monday’s peak. The likelihood of a Brexit deadline extension has also heightened talk of a General election being called before year-end, which is adding extra pressure.

The next technical support points could be the 23.6% retracement of the rally from October 8 to 21 at 1.2820 and the 200-day moving average at 1.2716. The pair is currently at 1.2848.

 

GBP/USD Daily Chart

Source: OANDA fxTrade

 

First steps in talks

No, not the ones between the US and China, but those between Japan and South Korea. Yonhap News reported that South Korea’s Prime Minister Lee has said he aims to set the tone for South Korea and Japan to facilitate dialogue when he meets with Japan’s Prime Minister Abe in Tokyo tomorrow. The two countries have been engaged in an escalating trade dispute since July, involving tit-for-tat removal from each other’s “trusted” export countries.

Both countries have seen exports in contraction each month since the spat commenced, with South Korea suffering the most.

 

Exports Chart

Source: Bloomberg; OANDA

 

Earnings the only input

There’s very little to excite on the data calendar today, so more attention is likely to be paid to earnings reports. Today we hear from Microsoft, Caterpillar, Ford and the trouble Boeing, among others. Tesla is unlikely to reverse the stream of losses.

Otherwise we only have UK mortgage approvals, US mortgage applications and August’s house price index. Weekly crude oil inventories from the Energy Information Authority (EIA) are expected to show a small build of 1.7 million barrels to October 18 from 9.3 million barrels the previous week Tuesday’s data from the American Petroleum Institute (API) showed a similar trend.

 

The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/

 

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Andrew Robinson

Andrew Robinson

Senior Market Analyst at MarketPulse
A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentary and live market analysis throughout the Asia-Pacific region. Having previously worked in Europe, since moving to Singapore he worked with several leading institutions including Bloomberg, Saxo Capital Markets and Informa Global Markets, proving FX strategies based on a combination of technical and fundamental analysis as well as market flow information. Andrew began his career as an FX dealer with NatWest and the Royal Bank of Scotland in the UK.
Andrew Robinson

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