Forex News: Pound Soars on Fresh Brexit News. Key Resistance Targeted
Forex News: German inflation data and U.S. Gross Domestic Product matched analysts’ expectation yesterday and each strengthened the respective currency. The pair bounced at support but failed to break resistance and moved lower again, creating irregular movement.
The next big move will be decided by the break of 1.1825 support or 1.1875 resistance because yesterday the pair was rejected by both these levels, thus increasing their importance. Price is testing support for the second time but at the time of writing it is showing rejection and has moved back above the 50 period Exponential Moving Average, facts which make us anticipate a move into 1.1875 and possibly a break.
The highlight of the day will be the release of the European CPI Flash Estimate, which is the main gauge of inflation across the Eurozone and has a high impact on the currency itself. The expected change is 1.6% from the previous 1.4% and anything above forecast strengthens the Euro; the time of release is 10:00 am GMT.
News that the EU and UK have reached an agreement regarding the Brexit “divorce” bill, boosted the Pound to fresh highs and took the pair 200 pips higher. The pair gave up some of the gains later in the day but momentum favours the bulls.
The bounce seen at 1.3225 was generated by strong fundamental reasons, not so much by the technical side, so the effects may extend over a longer period. In the short term we expect to see a touch of the key resistance located at 1.3450 (better seen on a Daily chart), where we expect to see a pullback.
The economic scene is calm today for the Pound, without any scheduled releases. That being said, caution is recommended because the Pound is prone to strong movement if surprising news come out.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 7-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.