FX168 Financial News (Hong Kong) - At the beginning of the European market on Tuesday (November 20), pound /The dollar hovered around 1.2855. After a round of sharp decline last week, the exchange rate rebounded from the low point of 1.2722 and continues to maintain a moderate upward trend.
Haresh Menghani, an analyst at FXStreet, recently wrote a brief technical analysis and forecast on the trend of sterling/dollar. The specific contents of his opinions are as follows:
The last trading day saw a good two-way fluctuation of GBP/USD, and continued to be driven by the news of Brexit. The pound/dollar continued to rebound and strengthen in the last trading day, reaching a high of 1.2884. It is reported that the possibility of the British Conservative Party's vote of no confidence in Theresa May may be diminishing. Later, the exchange rate encountered some radical selling pressure, and retreated nearly 100 points to 1.2793 below 1.2800 in the short term. Therefore, a news from the former foreign media increased the uncertainty and divergence of the extension of the transition period of Brexit.
According to foreign media reports, the EU's chief negotiator for Brexit proposed to extend the transition period of Britain's Brexit to December 2022. At the same time, the spokesman of British Prime Minister Theresa May said that Britain did not need to extend the implementation period. On the contrary, the Prime Minister insisted that the extension of the transition period must end before the next general election in June 2022.
On Monday (November 19), the Sun reported that 42 members of the Conservative Party of Theresa May confirmed that they had submitted letters of no confidence against Theresa May, and 48 letters could trigger a vote of no confidence. This shows that Teresa May's leadership challenge may still occur in the next few days, and will bring further downward pressure on the pound.
On this trading day, investors still need to focus on the British political situation. Foreign media reported that the vote of no confidence against British Prime Minister Teresa May could be held on Tuesday (November 20) at the earliest. If it is true, it may cause severe shock to the British pound. If Teresa May is faced with a real crisis of "stepping down", the pound will suffer a sharp fall, or return to the one-day decline of more than 200 points last Thursday (November 15).
However, last Friday (November 16), Richard Clarida, Vice Chairman of the Federal Reserve, caused a broad sell-off of the US dollar, which helped limit the further decline of the pound/dollar. Then the exchange rate rebounded to recover some losses. On this trading day, the Asian market was basically 1.2850 close to narrow range consolidation trading.
In addition to any latest news related to Brexit, investors should also pay attention to the Bank of England (BOE)'s inflation report hearing this trading day. Later this trading day, Bank of England Governor Dominique Carney and several members of the Monetary Policy Committee (MPC) will testify on inflation and economic prospects in the Finance Committee of the British Parliament, which may eventually promote the trend of sterling, thus bringing a new round of fluctuations to sterling/dollar.
Technically, the initial strong resistance of GBP/USD is located in the 1.2870/80 area, and the water level is also near the 100 hour average. If it breaks through, look up to the 1.2900 line, which is the 50% Fibonacci retracement of the decline in the exchange rate from 1.3072 to 1.2723 last week. If it breaks through, it will continue to test the resistance level of 1.2940, and even eventually regain the important 1.30 threshold.
On the downside, once the pound/dollar has any significant pullback, it is expected to find initial support in the 1.2800 region. If it falls below, it will be easy to test the 1.2730/20 support region again. Later, further selling will depress the exchange rate to continue to fall, even falling below 1.2700 to point to the year's low 1.2665/60 region.
In terms of economic data and financial events, this trading day focuses on:
16: 20 Australian Federal Reserve Chairman Lowe delivers a speech in Melbourne
17: 00 Austrian Central Bank Governor Nowotny Releases the Austrian Financial Stability Report
18: 00 Bank of England Governor Carney, Vice Governor Canleaf, Bank of England Chief Economist Haldane, and Bank of England Monetary Policy Committee member Sanders answered questions about the Bank's inflation report in November in London
19: UK November CBI Industrial Output Expectation Difference
21:00 Norges Bank President Olsen delivers a speech at a meeting
21:30 New housing starts in October in the United States
(One hour chart of GBP/USD source: FXStreet, FX168 financial network)
At 15:30 Beijing time, GBP/USD was 1.2855/57.
Checked by: Calm down
