GBP/USD Price Forecast – Brexit Woes Continue To Weigh Down British Pound
Sterling slips the 1.2900 level again as Brexit hopes turn back into angst once more.
The GBP/USD pair gapped lower at the weekly opening and was unable to fill it, collapsing to 1.2826 as the Brexit saga continues. Not only weekend news indicated that several UK Ministers were willing to resign, but also, a couple of Cabinet members said this Monday that there’s no chance PM May’s plan will pass the Parliament, therefore jeopardizing May’s leadership. The market was waiting for an emergency Cabinet meeting which finally didn’t occur. A special EU summit on Brexit is now out of the table for this month, and the market doubts about possibility of a meeting in December. The Pound got a boost from FT news, indicating that EU’s Chief Negotiator Barnier said that main elements of Brexit treaty text was ready, but resumed its decline after the market realized the Irish border issue remains unsolved.
Hawkish Macro Data in UK Unlikely To Inspire Bullish Momentum
As of writing this article, the GBP/USD pair is trading at 1.2878 up by 0.23% on the day after making a run at the 1.2900 handle in the early Asian market hours, but renewed Brexit concerns are seeing the Pound get hobbled in the broader marketscape, with previous hopes for a last-minute deal appearing this week once again getting dashed on the rocks. Early Tuesday action sees the GBP getting a relief bounce as the US Dollar pauses across the board, but a continued bull-run is looking unlikely unless today’s UK earnings figures can distract investors from the notable lack of forward momentum on Brexit proceedings. 09:30 GMT today sees the latest quarterly Average Earnings for the UK, with Earnings plus bonuses for the annualized quarter into September expected to print at 3.0%, a tick healthier than the previous quarter’s 2.7%, while Average Earnings excluding bonuses is expected to remain steady at 3.1%.
A better than expected macro data during London market hours could help the pair extend its relief rally for a short while, but bearish bias is expected to remain unchanged in short term. Hopes are waning for any progress to be announced before December’s meeting as well, and steadily-deflating expectations for a soft-Brexit scenario are going out the window, and taking the Pound’s exchange rate with them. Reuters latest survey of UK’s small and medium-sized enterprises (SMEs) revealed that thirty-four percent of firms expect Sterling to fall by more than 10 percent after Brexit. Meanwhile, only 1 percent of firms see the British currency appreciating by 10 percent or more. And this clear proof that market sentiment is slowly turning against British Pound as Brexit talks move towards deadline without any major progress. Expected support and resistance for the pair are at 1.2825, 1.2790, 1.2750 and 1.2880, 1.2935, 1.2960 respectively.
Dollar hits 16-month high
The dollar traded just below a 16-month high versus a basket of peers, benefiting from save-haven flows as investors shunned riskier assets because of political uncertainties in Europe and fears of a global economic slowdown.
Investor confidence has been eroded by bitter trade tensions between the United States and China, fears of a no-deal Brexit, and a standoff between Rome and the European Union over Italy’s deficit-deepening budget.
Added to that litany is a view that corporate earnings growth has peaked amid rising borrowing costs.
Shares on Wall Street tumbled on Monday with falls led by technology stocks.
The bearish mood crept into Asian trade as well with the MSCI ex-Japan index .MIAPJOOOOPUS falling 0.8 percent to trade at 477.5 on Tuesday.
The U.S. Federal Reserve is set to raise rates by 25 basis points in December, with two more hikes to follow by mid-2019, as wage pressures build in a booming economy..
The CME group’s FedWatch tool puts the probability of a December rate hike at 75 percent.
The dollar index, a gauge of its value versus six major peers, traded at 97.60, sitting just shy of its 16-month high of 97.69 hit on Monday.
“The dollar has broken out of a 17-month range on the back of safe-haven buying, led by falling equity prices as well as the heavy sell-offs in the euro and sterling,” said Nick Twidale, chief operating officer at Rakuten Securities.
Stock Market News
Australia stocks lower at close of trade; S&P/ASX 200 down 1.80%
Australia stocks were lower after the close on Tuesday, as losses in the IT, Healthcare and Financials sectors led shares lower.
At the close in Sydney, the S&P/ASX 200 declined 1.80%.
The best performers of the session on the S&P/ASX 200 were Orocobre Ltd (AX:ORE), which rose 3.54% or 0.160 points to trade at 4.680 at the close. Meanwhile, Mayne Pharma Group Ltd (AX:MYX) added 2.75% or 0.030 points to end at 1.120 and Corporate Travel Managment Ltd (AX:CTD) was up 1.79% or 0.390 points to 22.230 in late trade.
The worst performers of the session were Elders Ltd (AX:ELD), which fell 13.19% or 1.170 points to trade at 7.700 at the close. Afterpay Touch Group Ltd (AX:APT) declined 6.00% or 0.750 points to end at 11.750 and Incitec Pivot Ltd (AX:IPL) was down 5.67% or 0.240 points to 3.990.
Falling stocks outnumbered advancing ones on the Sydney Stock Exchange by 861 to 293 and 307 ended unchanged.
The S&P/ASX 200 VIX, which measures the implied volatility of S&P/ASX 200 options, was up 16.70% to 15.683.
Gold Futures for December delivery was up 0.08% or 1.00 to $1204.50 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in December fell 1.42% or 0.85 to hit $59.08 a barrel, while the January Brent oil contract fell 1.13% or 0.79 to trade at $69.33 a barrel.
AUD/USD was up 0.50% to 0.7209, while AUD/JPY rose 0.62% to 82.18.
Apple Suppliers Tumble on New Signs of Weak iPhone Demand
Major suppliers to Apple Inc.’s iPhone fell Tuesday as investors fretted that one of the most important product lines in the technology sector was seeing weak demand.
In Asia, Japan Display Inc. slashed its forecasts for sales growth and operating margins, citing volatile customer demand. JDI, which makes LCD screens used in the iPhone XR, plunged as much as 11 percent to its lowest since debuting in 2014. Lumentum Holdings Inc. plummeted a record 33 percent after cutting its second-quarter outlook when one of its largest customers asked to “meaningfully reduce shipments” for previously placed orders.
Lumentum, a maker of parts used for facial recognition, didn’t name the customer but Apple is its biggest, according to Bloomberg supply-chain data. Apple fell 5 percent. Oclaro Inc., which is being bought by Lumentum, lost 12 percent, its biggest drop since April.
“Investors should consider Lumentum’s updated guide as reflecting as much as a 30% cut in Apple orders,” Wells Fargo analyst Aaron Rakers said in a note to clients.
“Concerns of JDI’s survival are likely to persist,” Jefferies analyst Atul Goyal wrote in a note to clients. “With uncertainty/volatility in the demand for its major customer’s new models” and more phone makers switching to new technologies, the sustainability risk to its fundamentals still remains, he added.
Lumentum executives told investors at a UBS Group AG conference in San Francisco that the customer asked to cut 3-D component shipments just days ago after having requested expedited orders in recent weeks.
The development “is not entirely surprising” but “it seems very likely to us that the market for 3D sensing-related light sources and other components is going to be smaller next year than previously anticipated,” James Kisner, an analyst with Loop Capital Markets, said in a research note.
Apple didn’t immediately reply to a request for comment late Monday.
Bitcoin Cash, Litecoin and Ripple Daily Analysis – 13/11/18
It’s a mixed start to the day, with market focus continuing to be on the BCH hard fork on Thursday, hash rates key for direction through the day.
Bitcoin Cash Sees More Red
Bitcoin Cash fell by 2.78% on Monday, following on from a 4.1% slide on Sunday, to end the day at $520.6.
A bearish start to the day saw Bitcoin Cash slide to a late morning intraday low $504.7, Bitcoin Cash sliding through the first major support level at $516.33 to find support at $500 and avoid testing the second major support level at $497.17.
Recovering to an early afternoon Bitcoin Cash intraday high $544 that fell short of the first major resistance level at $556.53 was as good as it got, with Bitcoin Cash easing back through the rest of the day to $520 levels, the moves driven by the news wires, as the hard fork rapidly approaches.
At the time of writing, Bitcoin Cash was down 1.18%, with Bitcoin Cash falling to an early morning low $508.5 before recovering, the day’s major support and resistance levels left untested early on.
For the day ahead, a move through the morning high $522 to $525 levels would support a run at the first major resistance level at $541.5, though much will depend on the news wires through the day, the hash rates of Bitcoin ABC and Bitcoin SV key for direction, Bitcoin ABC positive news likely to bring the day’s second major resistance level at $562.4 into play.
Failure to move back through the morning high could see Bitcoin Cash take a bigger hit later in the day, support for Bitcoin SV likely to lead to a pullback through the morning low to call on support at the first major support level at $502.2, sub-$500 levels in play should hard fork jitters build.
Litecoin Holds onto the $50s
Litecoin fell by 0.93% on Monday, following on from a 2.04% fall on Sunday, to end the day at $50.33.
A start of a day intraday high $51.34 came up short of the first major resistance level at $52.03, with a slide to a morning low $50.02 seeing Litecoin hold above the first major support level at $49.54. Following an early afternoon recovery, a late in the day intraday low $50 also avoided the major support levels on the day.
At the time of writing, Litecoin was down 0.38% to $50.14, with Litecoin falling through the first major support level at $49.77 to a morning low $49.52 before recovering to $50 levels.
For the day ahead, a move back through a start of a day high $50.33 to $50.6 would support a run at the first major resistance level at $51.11, though sentiment across the broader market will have an influence on the day, the second major resistance level at $51.9 unlikely to be tested barring particularly positive news hitting the wires.
Failure to move back through the morning high could see Litecoin decline further later in the day, a pullback through the first major support level to the morning low $49.52 bringing the second major support level at $49.22 into play before any recovery, sub-$49 support levels unlikely to be tested on the day.
Ripple Bucks the Trend
Ripple’s XRP gained 2.77% on Monday, following a 0.15% rise on Sunday, to end the day at $0.52403.
A relatively range bound start to the day saw Ripple’s XRP ease to a late morning intraday low $0.50519 before steadying, the morning low holding above the first major support level at $0.5012.
An early afternoon rally saw Ripple’s XRP break through the first major resistance level at $0.5155 and second major resistance level at $0.5210 to come up against the third major resistance level at $0.5353 before easing back, with Ripple’s XRP unable to hold above the 38.2% FIB Retracement Level of $0.5225 by the day’s end.
At the time of writing, Ripple’s XRP was up 0.64% to $0.52738, Ripple’s XRP recovering from an early morning low $0.51591 to break through the 38.2% FIB Retracement Level of $0.5225 to strike a morning high $0.52795 before easing back, the day’s major support and resistance levels left untested.
For the day ahead, a hold above $0.5225 would support a run at $0.53 levels to bring the first major resistance level at $0.5378 into play before any pullback, $0.54 levels and the second major resistance level at $0.5515 unlikely to be in play, barring particularly positive news hitting the wires.
Failure to hold above the 38.2% FIB Retracement Level of $0.5225 could see Ripple’s XRP fall through the morning low $0.51591 to $0.50 levels, bringing the day’s first major support level at $0.5077 into play before any recovery, sub-$0.50 support levels unlikely to be in play on the day, barring materially negative news hitting the wires.
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