October 15, 2020 5:17:06
Market Update – 15th October 2020
The EURGBP plunged roughly 100 pips as reports coming from the Brexit negotiations turned positive. Boris Johnson has been advised not to walk away from the negotiations after today’s deadline day. Reports coming from the UK are suggesting both parties are prepared to prolong talks into the year-end if a deal isn’t struck during today’s EU summit.
There is still a possibility of a no-deal, therefore traders purchasing the GBP should trade with caution. It appears the final sticking point is focused on fisheries, and whilst the two sides are reportedly far apart in agreement, this also provides some positive light. With only the one topic of discussion left, there is a possibility of a preliminary deal being pushed through. Although any agreement may not live up to the expectations of the market.
This brings us to the EURGBP charts:
EURGBP – Daily Charts
Traders have been actively fading EURGBP on positive Brexit news. However, the current falling wedge/bull flag structure suggests to short with caution. Currently, the pair is trading on the bottom trend line leading into the EU session.
EURGBP – 4 Gour Charts
Trading the EURGBP has not been a smooth ride over the past couple of weeks. Extreme chop has been in play. Currently, market sentiment appears to be more positive about a potential Brexit trade deal. However, the technicals are suggesting otherwise. The BULL flag/falling wedge structure indicates price compression. Any sniff of a no-deal Brexit may result in a breakout to the upside after a number of failed attempts.
On the chance of a positive result today, a break to the downside will release a huge amount of pressure that is currently building. It will be a very interesting night on the market.
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