Brexit Update – where could GBP go from here?

GBPAUD

GBPAUD is currently up-trending within a bullish channel. The moving averages are moving sideways, suggesting a lack of trend momentum. The GBPAUD is nearing pre-Brexit referendum prices.

If the UK leave the EU with a deal – Price will likely move above the current bullish channel resistance area and pre-referendum prices. A upside rally could find resistance around the highs and resistance at 2.1900.

If the UK leave the EU without a deal – Price will likely test the moving averages and channel support area. A break lower than this may find support around the horizontal support levels at 1.6040 and 1.4565.

If the UK postpone Brexit – more uncertainty, which may lead to GBP weakness. If cancelling Brexit gains more support, this could push GBPAUD higher.

The Reserve Bank of Australia (RBA) has cut rates again by 0.25% to 0.75% (a record low). The current low rate is needed to help reduce the unemployment rate and stimulate economy . It is likely that official rate will stay low and may even be cut further. The Bank of England (BOE) continues to hold interest rates at 0.75% – 50 base points higher than the 2016 & 2017 low of 0.25%. The official rate could see a limited and gradual increase if there is a smooth Brexit and economic indicators continue to show growth. Brexit deal talks are progressing positively, given strength to the GBP.

GBPCAD

GBPCAD is moving within a bearish channel but also ranging between 1.5805 and 1.8240. The moving averages are bearish – confirming the recent downside momentum.

If the UK leave the EU with a deal – Price will likely move above the moving averages and current bearish channel resistance area and will test the range resistance area. A break to the upside of the range may rally to pre-referendum prices.

If the UK leave the EU without a deal – The GBPCAD could move below the channel and range support areas and find support around the lows at 1.5330. Expect the current downtrend to continue.

If the UK postpone Brexit – more uncertainty, which may lead to GBP weakness. If cancelling Brexit gains more support, this could push GBPCAD higher.

The Bank of Canada (BOC) continues to raise interest rates at a steady pace. The current rate is 1.75% – it’s highest since December 2008. The economy is currently performing well and inflation targets are currently at their potential, meaning that the rate of 1.75% may not change in the near future. The Bank of England (BOE) continues to hold interest rates at 0.75% – 50 base points higher than the 2016 & 2017 low of 0.25%. The official rate could see a limited and gradual increase if there is a smooth Brexit and economic indicators continue to show growth. Brexit deal talks are progressing positively, given strength to the GBP.

GBPCHF

The GBPCHF is currently down-trending. The moving averages are bearish and steady – confirming the downside direction.

If the UK leave the EU with a deal – Price may move above the trend resistance area and form a higher swing high. The GBPCHF could find resistance around 1.3715 but may attempt a move to pre-referendum prices.

If the UK leave the EU without a deal – GBPCHF could find support around the recent lows at 1.1660 but will likely swing lower and continue to downtrend.

If the UK postpone Brexit – more uncertainty, which may lead to GBP weakness. If cancelling Brexit gains more support, this could push GBPCHF higher.

The Swiss economy was stagnant throughout late 2018 but has been showing signs of positive momentum in 2019. The Swiss Franc continues to be highly valued, especially due to the current global uncertainties around Brexit and the US. The SNB has announced that it will continue to intervene with in foreign exchange markets. The Bank of England (BOE) continues to hold interest rates at 0.75% – 50 base points higher than the 2016 & 2017 low of 0.25%. The official rate could see a limited and gradual increase if there is a smooth Brexit and economic indicators continue to show growth. Brexit deal talks are progressing positively, given strength to the GBP.

GBPJPY

The GBPJPY is currently indecisive and ranging between the horizontal support at 126.55 and the recent swing high at 155.05. The moving averages are tightening – confirming the current lack of trend momentum.

If the UK leave the EU with a deal – Price could swing above the moving averages and pre-referendum prices and test the range resistance area.

If the UK leave the EU without a deal – GBPJPY will likely test the range support area and could break lower.

If the UK postpone Brexit – more uncertainty, which may lead to GBP weakness. If cancelling Brexit gains more support, this could push GBPJPY higher.

The Bank of Japan (BOJ) continues to keep interest rates at the record low of -0.10%. The Japanese economy was under-performing in 2018 but is currently seeing signs of moderate expansion. The Bank of England (BOE) continues to hold interest rates at 0.75% – 50 base points higher than the 2016 & 2017 low of 0.25%. The official rate could see a limited and gradual increase if there is a smooth Brexit and economic indicators continue to show growth. Brexit deal talks are progressing positively, given strength to the GBP.

GBPUSD

Just like GBPJPY, the GBPUSD is lacking trend direction and is currently indecisive. Price is ranging between 1.2025 and 1.4220. The moving averages are starting to tighten and move sideways – confirming the current indecision.

If the UK leave the EU with a deal – The GBPUSD may rally above the moving averages and test the range resistance at 1.4220. A break to the upside of the range could attempt a move to pre-referendum prices.

If the UK leave the EU without a deal – Price will likely test the range support area and break lower. The GBPUSD may start down-trending again.

If the UK postpone Brexit – more uncertainty, which may lead to GBP weakness. If cancelling Brexit gains more support, this could push GBPUSD higher.

The US Federal Open Market Committee (FOMC) has cut rates by a further 25 points due to heightened concerns regarding the economy and ongoing trade tensions with China. The current Fed Funds rate is 2.00%. Pressures of economic recession and from the US President may lead to further rate reductions. The Bank of England (BOE) continues to hold interest rates at 0.75% – 50 base points higher than the 2016 & 2017 low of 0.25%. The official rate could see a limited and gradual increase if there is a smooth Brexit and economic indicators continue to show growth. Brexit deal talks are progressing positively, given strength to the GBP.

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