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Sterling Pauses after Soaring

Dave Evans

1. Sterling is pausing this morning after soaring yesterday on hopes that today will see the close of the first phase of Brexit negotiations. Teresa May is expected to travel to Brussels to announce a solution to the Northern Ireland border problem. The EUR/GBP has dropped to its lowest levels since June this morning, will follow on buying for the GBP/JPY. The GBP/USD is slipping back however.

2. By contrast, the EUR/USD is dropping for the fourth day in a row.

3.The AUD/USD is unchanged after dropping for the last two days.

4. The USD/JPY is extending its mini bull run, with most other yen pairs following suit.

5.Gold is nudging higher after heavy selling yesterday.

Coming up today

1. At 09.30, we get UK manufacturing production at 09.30, released alongside goods trade balance.

2.At 13.30, we get US Non Farm Payrolls which are expected to increase by 198,000. At the same time, we have average hourly earnings and the unemployment rate.

3.At 15.00, we get preliminary UoM consumer sentiment.

Trade Idea

The pound had a strong day yesterday and it just underlines how sensitive the pound is to Brexit twists and turns. The general trend has been positive though which contrasts with the Australian dollar which has been struggling of late.

As such the GBP/AUD has risen steadily since the beginning of September and could climb further.

A good way to play this is a HIGHER trade predicting that the GBP/ AUD will close above 1.8050 in 14 days for a potential return of 123%.

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Source: https://academy.binary.com/en/daily-report/
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