GBP/USD May Be Volatile Without Parliament

GBP/USD May Be Volatile Without Parliament

City Index  | Sep 11, 2019 17:21

With UK Parliament suspended for the next few weeks, what is going to make GBP/USD move? Although it is still early in the US trading session, a bullish move in DXY (particularly today's bullish candle), can move GPB/USD lower.

US Dollar Index

Source: Tradingview, FOREX.com

But as of the time of this writing, DXY is up 0.37% and GBP/USD is only down 0.17%.

Another obvious factor that tends to move GBP/USD is economic data releases. Here is economic data released over the last 2 days for the UK:

Actual (MoM) Estimated

Industrial Production (Jul) 0.1% -0.1%

Manufacturing Production (Jul) 0.3% 0.1%

GDP (Jul) 0.3% 0.1%

Trade Balance (Jul) -9.14B -9.60B

Avg hourly Earnings (ex bonus) (Jul) 4.0% 3.7%

Claimant Count Change (Aug) 28.2K 29.3K

Unemployment Rate (Jul) 3.8% 3.9%

Better than expected manufacturing and employment data, across the board. But again, as of the time of this writing, the current price is 1.2328 vs Monday’s close at 1.2344.

Lower than Monday's close

GBP/USD

Source: Tradingview, FOREX.com

With a stronger US Dollar and stronger economic data from the UK, one would expect that GBP/USD would be more volatile. However, it is only down 16 pips from Monday’s close. Why?

GBP/USD has primarily been trading on the Brexit theme. And now, with Parliament closed, the market is waiting for one thing: HEADLINES! The more headlines we see, the more volatile the pair will act. Be on the lookout for comments from the UK, EU, and other countries willing to negotiate deals separately with the UK. Watch for headlines, regarding the Irish border, hard Brexit, soft landing Brexit, and the like.

Although this sounds very simplistic, Brexit headlines may be the only thing that will move this pair for the next few weeks! Technicals may not matter once a significant headline is released. But for now, there is horizontal resistance just above at 1.2375. The pair has tried to break through this area numerous times the past few days and failed to do so. Trendline support comes in near 1.2190, then at the highs of the hammer candle on September 3rd at 1.2105.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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