Waiting for Godot is a well-known play by Samuel Beckett where in short, nothing much happens and nothing is certain. This may sound boring but really, it’s anything but boring.

The summer months in markets remind us of this at times. They are historically well-known for being some of the quietest months in the markets and with volumes razor-thin. Indeed, the dollar has traded in such a narrow range this summer that its daily ‘standard deviation’ is now the lowest this year and closing in on historic lows.

However, one move that has caught our eye is that of sterling which is the weakest major this quarter and has recently hit levels against both the US dollar and euro last seen in August / October 2017. We’ve printed six consecutive down days since the BOE hike last week. Interestingly too, its three month implied volatility is currently the highest since late February.

GBPUSD

Why so? Many in the market are citing Liam Fox stating that the odds of a breakdown in Brexit talks stands at 60%. Even if this is posturing and the UK Government’s tactics are to talk up the chances of this happening, does this warrant yesterday’s move lower through 1.29 in cable? Some are also citing seasonal factors with the average move in GBP/USD being near -1% over the last nine Augusts.

Of course hard Brexit jitters have always been ever present in sterling to be reignited at any stage. Indeed, only today there are rumours that PM May is stepping up ‘hard Brexit’ preparations and a Cabinet meeting is set for September to progress this position.

Whatever, we are here to see where cable goes from here after this strong selling pressure. Intraday signals suggest a minor low may have been reached but any gains for GBP remain limited when seen in the context of the long-term well-defined downtrend in the pair since making highs in April.

With trend signals bearish on numerous timeframes, any moves higher should be capped by the previous swing low around 1.2958. This means we could fall further to 1.27-1.28 into September with this strong bearish momentum to the fore. As we know, summer markets may sound boring but they can be anything but…

This research is for informational purposes and should not be construed as personal advice. Trading any financial market involves risk. Trading on leverage involves risk of losses greater than deposits.

Recommended Content


Recommended Content

Editors’ Picks

GBP/USD extends recovery gains to near 1.3250, as BoE looms

GBP/USD extends recovery gains to near 1.3250, as BoE looms

GBP/USD extends the recovery to near 1.3200 in European trading on Thursday, having found buyers near 1.3150. A fresh US Dollar pullback and a rebound in risk sentiment offer support to the pair ahead of the BoE policy announcements. 

GBP/USD News
EUR/USD advances to 1.1150, focus shifts to ECB-speak

EUR/USD advances to 1.1150, focus shifts to ECB-speak

EUR/USD is well-bid near 1.1150 in the European session on Thursday. The pair is underpinned by the renewed US Dollar retreat and an upbeat mood. Traders digest the Fed's dovish outlook, bracing for ECB-speak for fresh trading incentives. US data are also eyed. 

EUR/USD News
Gold price jumps back closer to all-time peak, $2,600 remains in sight amid fresh USD weakness

Gold price jumps back closer to all-time peak, $2,600 remains in sight amid fresh USD weakness

Gold price regains positive traction following the previous day's pullback from the all-time peak and builds on its steady intraday ascent heading into the European session on Thursday. 

Gold News
BoE expected to keep interest rate unchanged at 5% as price pressures persist

BoE expected to keep interest rate unchanged at 5% as price pressures persist

After a close call in August, the Bank of England’s September interest rate decision is keenly awaited for fresh cues on the bank’s future policy action and the pace of its bond sales.

Read more
Bitcoin surges to $62,000 mark after 50 bps Fed rate cut

Bitcoin surges to $62,000 mark after 50 bps Fed rate cut

Bitcoin and Ripple eye for a rally as they break and find support around their resistance barrier. Meanwhile, Ethereum demonstrates signs of recovery as it approaches a critical resistance level, indicating that an upward rally could be on the horizon if it successfully breaks through.

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures