British pound rises ahead of Boris Johnson meeting on Brexit
The British pound bounced back as traders waited for the outcome of Boris Johnson’s last-ditch effort to save Brexit. The prime minister will meet with EU’s Ursula von der Leyen in Brussels over dinner. These talks come at a time when the two sides are in deep disagreements about key issues like fisheries and guidelines to enforce the deal. Also, they come a day before an important meeting of EU leaders and a few days before the December 31 deadline. Without a deal, economists believe that the British economy will contract by about 2% and lose thousands of jobs.
The Canadian dollar gained against the US dollar ahead of the final interest rate decision by the Bank of Canada. According to Bloomberg, analysts believe that the Bank of Canada will leave interest rates unchanged at 0.25%. They also expect it to maintain the c$4 billion weekly quantitative easing policies intact. Higher oil prices have also helped the Canadian dollar. The price of Brent has jumped by 0.50% while that of the West Texas Intermediate (WTI) has risen by 0.60%.
The euro is wavering today as traders wait for a decision on EU budget. There have been divisions among EU members among a key law and order provision that comes as part of the deal. In a statement yesterday, Hungary’s Viktor Orban, who has threatened to veto the budget, remained optimistic about the deal. Investors are also focusing on tomorrow’s interest rate decision by the European Central Bank. Analysts also believe that the bank will leave rates unchanged and increase the size and duration of the quantitative easing program.
The EUR/USD is trading at 1.2121, where it has been in the past few days. Because of this consolidation, the average true range (ATR) has fallen while the price is at the same level as the 25-day and 15-day exponential moving averages. It is also between the important channel that has a support and resistance at 1.2080 and 1.2177. Therefore, unless there is a major event today, the pair will possibly remain in this range during the American session.
The GBP/USD is trading at 1.3455, which is higher than this week’s low of 1.3219. On the four-hour chart, the price is slightly above the ascending trendline shown in yellow. It is also slightly above the middle line of the Bollinger Bands while the histogram of the MACD has moved above the neutral level. The pair is likely to continue rising with the next level to watch being last week’s high of 1.3590. Still, this will depend on the outcome of the Brexit meeting.
The USD/CAD pair dropped to an intraday low of 1.2782, which is the lowest it has been in years. As shown on the four-hour chart below, it has found strong support at the current level. It is also slightly below the 25-day and 15-day EMA while the RSI is slightly above the overbought level. Therefore, the pair’s path of least resistance is lower but this could change depending on the BOC decision.