FX Market and Economic Analysis
Bit of a bounce going on at the moment with GBP/USD at the 1.31 gaining some 200 pips over the last 2 days. Obviously with the UK conservative party is sorting itself out and Theresa May becomes the new Prime Minister for the British government. But one cannot help but feel a loss of reality as the tabloids show the new beaming smile full of confidence. The harsh reality is that a Brexit diminishes the UK forex market potential within the global clock as international banks continue to mutter and re-examine the need to shift trading staff to Paris and Frankfurt and Zurich. In other words time will run it's course and reality will eventually reappear as the UK government takes stock of capital flows and how UK companies will become adversely affected by breaking the European integration.
GBP/USD 50 day moving average sitting at 1.41 and longs will try to see a retracement to the 1.35. However stiff resistance should reappear at the 1.35 (Key support at 1.3503 (23/01/2009 low)). Hourly support can be found at the 1.2798 (06/07/2016 low) as traders will eventually wear thin of positive news on the Brexit.
Economic analysis reinforces opinions that GDP will lose considerable momentum which brings to the fore our new global macro strategy of gains in the UK property sector in comparison to losses in other sectors of the UK economy. Economists see an annualized growth near 1.6% now and higher borrowing costs for a shortfall in the next budget 2017 with a hole of some 300 billion Pound Sterling. so much for the much vetted NHS cash back which was the main platform of the leave campaign. The harsh reality is that traders will continue to short Sterling Pound this year and next as the dust and turmoil settles after the triggering of Article 50.
Small traders closely pay attention to the 1.35 level as a short entry on the wave of institutional selling that may occur on the GBP/ USD around this mark.
George Soros sees GBP/USD 1.15 and there aren't too many economists who would argue his opinion at this moment.
Furthermore, the EUR/USD should decline in tandem albeit at a slower rate of depreciation as traders eye the 1.05 level later this year with sluggish economic growth to be expected as a consequence of the monumental breakup and Eurro uncertainty.
GBP/USD 50 day moving average sitting at 1.41 and longs will try to see a retracement to the 1.35. However stiff resistance should reappear at the 1.35 (Key support at 1.3503 (23/01/2009 low)). Hourly support can be found at the 1.2798 (06/07/2016 low) as traders will eventually wear thin of positive news on the Brexit.
Economic analysis reinforces opinions that GDP will lose considerable momentum which brings to the fore our new global macro strategy of gains in the UK property sector in comparison to losses in other sectors of the UK economy. Economists see an annualized growth near 1.6% now and higher borrowing costs for a shortfall in the next budget 2017 with a hole of some 300 billion Pound Sterling. so much for the much vetted NHS cash back which was the main platform of the leave campaign. The harsh reality is that traders will continue to short Sterling Pound this year and next as the dust and turmoil settles after the triggering of Article 50.
Small traders closely pay attention to the 1.35 level as a short entry on the wave of institutional selling that may occur on the GBP/ USD around this mark.
George Soros sees GBP/USD 1.15 and there aren't too many economists who would argue his opinion at this moment.
Furthermore, the EUR/USD should decline in tandem albeit at a slower rate of depreciation as traders eye the 1.05 level later this year with sluggish economic growth to be expected as a consequence of the monumental breakup and Eurro uncertainty.
Pieter Bergli - Trader X16
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