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NY Open: Is sterling calling Mayday?

Forex 4 minutes to read
Michael O’Neill

FX Trader,

Summary:  Sterling is taking a beating as the market frets about the Gordian knot that is Brexit. Meanwhile, oil prices have tumbled as the Saudis move to stave off a 1973-style oil crisis.

GBPUSD is in distress. Faint calls of “Mayday, Mayday” made sterling the second-worst performing major G-10 currency against the US dollar since Friday’s New York close and the worst performing one since New York opened today.

Theresa May is still prime minister, but her days could be numbered if you believe the slew of press articles. She is supposedly going to tell parliament that a Brexit deal is 95% done, per the UK Guardian and BBC. The key issue is the Irish border. GBPUSD traders have been thoroughly spooked, driving the currency from a peak of 1.3088 to 1.2957. The price bounce to 1.2980 was of the dead cat variety and the short-term technicals are bearish, supported by the break of support at 1.3010. A move through support at 1.2920 sets the stage for a visit to 1.2780.

The sterling jitters seeped into EURUSD and helped to snap a rally that was testing downtrend support at 1.1550. The retreat below 1.1500 targets support in the 1.1460-70 area, which if broken opens the door to further losses to 1.1295. Italy and the EU have stepped into the Octagon to discuss the Italian budget which will have all the drama of the Connor McGregor and Khabib Nurmagomedov bout.

Wall Street opened higher, taking its cue from Europe but the gains were short-lived. The three major industries are in the red as risk fears rise. There are a lot of major earnings reports on Thursday. Expectations for stronger than expected earnings should temper losses today.

Oil prices dived. Saudi Arabia energy minister Khalid al-Falih said that the kingdom’s oil production would soon rise to 11 million barrels per day in an effort to stave off a 1973 style oil price shock. WTI plunged from $69.60/barrel to $68.29 on the news.
GBPUSD, hourly. Source: Saxo Bank


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