The British pound carry’s on to achieve gains from confidence regarding achieving a Brexit trade deal. The pair jumped to the resistance level at 1.3442 at the beginning of December’s trading, its peak level in three months, before settling just under 1.3400. There are recent signs that indicate that trade negotiators are continuing to move towards a trade deal after Brexit, supported by optimistic comments from German Chancellor Angela Merkel, who is pushing negotiators to “put all our efforts in the last step.”
The cable pair gained by 3% in November, but it looks that the majority of the move was due to the weakening of the US dollar rather than the strength of the pound. The pound to euro exchange rate -was only able to rise 0.4% in November, plus October’s gains of 0.8%.
The rhetoric from both sides has reached its highpoint, because despite all the disputes, real progress on fisheries and equal opportunity appears to be lacking. Like stocks, the British pound has been somewhat immune to the recent bad news, but after a huge rally, not only since September, but since the middle of the year as well, it will need some really good news to avoid a fall in December, when the reality of a no-deal Brexit begins to increase.”
The market is currently trading on informal news, as government sources and members of the various negotiating teams inform members of the press informally about the latest developments. This means that the pound can move based on false rumors, creating a frenzied atmosphere where volatility is high but the directional advance is slow, as investors see little benefit in taking a large directional bet on a currency where visibility is very low.
Accordingly, German Chancellor Angela Merkel increased her cautious sense of optimism when she said on Monday that she hopes for a positive outcome to the negotiations, and that some European Union countries “are losing some patience.” She also said that the concern of some member states was that the time needed to reach an agreement was running out. She said getting a deal would require a “clever hand”.
We remain bullish with all eyes at the Fridays US NFP number which will at the very least increase the volatility of the pair.
Warning:
Trading on CFDs involves a high level of risk, including full loss of your trading funds. Before proceeding to trade, you must understand all risks involved and acknowledge your trading limits, bearing in mind the level of awareness in the financial markets, trading experience, economic capabilities and other aspects.
Disclaimer:
Market Trends, Charts, Trading Ideas or other information provided by BKFX (Pty) Ltd and/or third parties are not intended as an investment advice and/or recommendation. The information provided is not presented as suitable or based on your specific need. You are responsible for your own investment decisions and you should not trade with money you cannot afford to lose. Any views or opinions presented in this Article are solely those of the author and do not necessarily represent those of the Company, unless otherwise specifically stated. The Company may provide the general commentary which is not intended as an investment advice and must not be construed as such. Seek advice from a separate financial advisor if an investment advice is needed. The Company assumes no liability for errors, inaccuracies or omissions, inaccuracies or incompleteness of information, texts, graphics, links or other items contained within this article/material.