background image

Brexit headbutts sterling

Michael O’Neill

FX Trader,

A Bloomberg headline on Brexit headbutted GBPUSD from 1.3273-1.3210 in New York trading. It said: "Chancellor Angela Merkel’s government is unconvinced by UK Prime Minister Theresa May’s latest attempt at a compromise arrangement for customs after Brexit, seeing it unworkable, according to a person familiar with the German stance. 

The news suggests that the cabinet meeting at Chequers on Friday to hammer out a Brexit proposal could be a futile effort. GBPUSD snapped the intraday uptrend line when prices dropped below 1.3230, suggesting further losses to 1.3180, today.

EURGBP sterling spiked above 0.8340 resistance setting up a test of the June peak at 0.8890 as EURUSD climbed on speculation of a thaw in EU/US auto tariff tensions. EURUSD bounced off of resistance at 1.1720.  A break below 1.1650 would lead to a retest of support in the 1.1560 area.

US economic reports were mixed.  ADP employment and initial jobless claims missed forecasts, but any disappointment was offset when the ISM non-manufacturing report rose 0.5 to 59.1.

Wall Street appears to like the improved tone to EU/US trade talks. The DJIA and S&P 500 are up about 0.50%.  The gains may be hard to sustain ahead of tomorrow’s US employment report, and in the event the China/US trade spat turns into a full-blown war.

Oil prices plunged after WTI touched $74.78 earlier this morning. The drop coincided with US dollar losses against the major currencies (except GBP) and reached a low of $73.70. President Trump is blaming Opec for the current level of oil prices, conveniently forgetting it was his action against Iran, which triggered the rally.
The commodity currency bloc is tracking broad US dollar moves, albeit reluctantly. Fears of an escalating trade war are weighing on the currencies. USDCAD traders are looking ahead to Friday’s Canadian employment report for confirmation that the Bank of Canada will raise rates on July 12.  USDCAD has good support in the 1.3050-90 area.

Chart: EURUSD one hour with resistance area highlighted:

Source: Saxo Bank


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide and Product Disclosure Statement to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as CFDs and Margin FX products may result in your losses surpassing your initial deposits. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.
Please click here to view our full disclaimer.