Mario Blascak, PhD
Independent Analyst
- The Brexit rumors of financial services deal being done this week pushed Sterling back above 1.3000
- The UK services PMI fell to 52.2, missing the market expectations of a slide to 53.3 in October from 53.9 in the previous month.
- The UK Finance Ministry Official John Glen, as he says that he is extremely confident on reaching a Brexit deal on financial services imminently.
- Even with Sterling sliding back below 1.3000, 1.3085 remains the immediate target.
The GBP/USD opened with the gap on the upside rising to a fresh 2-week high of 1.3045 on Brexit optimistic weekend headlines suggesting the UK will finalize the financial services deal this week. The news slowly receded with the UK fundamentals playing in and the GBP/USD fell back below 1.3000. After the GBP/USD closes the gap falling to 1.2960, positive Brexit headlines are set to target 1.3085 next on the upside.
The UK Finance Ministry Official responsible for the financial services industry John Glen said that he is extremely confident in reaching a Brexit deal on financial services imminently.
Meanwhile, the IHS/Markit reported the UK services PMI fell to 52.2 in October missing big time on expectations of 53.3 and falling from 53.9 in the previous month.
The GBP/USD broke away from the downward sloping trend in a 1-hour chart and appreciated strongly to 1.3040 level. Given the speed of Sterling’s current appreciation and the fact that Sterling opened with the gap on the upside the immediate directional movement on Sterling should be on the downside with retracement towards 1.2960. This scenario is supported by the bearish crossover of Slow Stochastics downwards. Although correction might see GBP/USD retreating to 1.2960 near term, the ultimate target in a corrective move lays at 1.3085 representing 23.6% Fibonacci retracement of Sterling falling from 2018 high of 1.4377 to 2018 low of 1.2662.
GBPUSD 1-hour chart
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