British pound unchanged as UK plans to undermine withdrawal treaty
The British pound was little changed even as risks of a no-deal Brexit emerged. According to the Financial Times, the UK plans new legislation that will override key sections of the withdrawal agreement that was signed in January. The bill, called the internal market bill, will contain sections that will eliminate some sections like state aid and Northern Ireland customs. The new revelations come ahead of the next phase of Brexit talks between the two sides. They also come at a time when the UK and the EU have failed to reach an agreement on several key issues like fisheries and the European Court of Justice.
The Australian dollar was little changed during the Asian session as traders reacted to weak service index data from Australia. According to the Australia Industry Group (AIG), the service index declined to 42.5 in August from the previous 44.0. The data came a few days after another number by AIG showed that the manufacturing sector declined slightly in August. This performance was due to the new wave of coronavirus that emerged in key states like Victoria and Melbourne. The currency also reacted to data by ANZ that showed that job advertisements rose by just 1.6% in August from the previous 19.1%.
The US market will be closed today as the country celebrates its labour day. The most important economic data will come from China where the statistics office will release the August trade data. Analysts expect the country’s exports to have increased by 7.1% while imports rose by 0.1%. In Japan, we will receive the leading and coincident indicators. The two are indices of other indicators, which provide a gauge of the performance of the economy. From the UK, we will receive the house price index from Halifax.
The GBP/USD pair is trading at 1.3240, which is the same level it ended Friday on. On the four-hour chart, the price is between the 50-day and 25-day exponential moving averages. It is also along the ascending trend line that is shown in yellow. The signal and main lines of the MACD have moved below the neutral line while the money flow index has reached the oversold level. Therefore, the pair is likely to break out lower as traders attempt to move below 1.3200.
The EUR/USD pair is little changed today and is trading at 1.1834. On the four-hour chart, the price is slightly above the lower side of the ascending channel that is shown in white. The price is also along the middle line of the Bollinger bands. It is also consolidating near the support level as shown in red. This means that the pair is likely to break out lower as bears attempt to move to the next resistance at 1.1800.
The AUD/USD pair is trading at 0.7283, which is closer to Friday’s close. As the GBP/USD, it is between the 50-day and 100-day exponential moving averages. The signal and main line of the MACD have also moved below the neutral line. It is also above the ascending trend line that is shown in white. Therefore, the pair is likely to remain bullish if the price stays above this resistance line.