Sterling holds steady on Brexit deal optimism
The British pound and the FTSE 100 index rallied today after the EU and the United Kingdom reached a Brexit agreement. The new deal, which will need to go through the British and EU parliament, removes the possibility that the UK will complete its Brexit process without a deal. The two sides reached the deal after the UK made key concessions surrounding fisheries. Without a deal, the two sides would have placed tariffs against each other and initiated border security checks. As a result, the UK’s economy would have dropped by an estimated 2% and lost more than 300k jobs in 2021.
The US dollar declined against most peers as traders reacted to the decision by Donald Trump to hold-on the $900 billion stimulus deal that was passed early this week. The president has insisted that Congress should revise the deal and change the payments to individuals from $600 to $1,200. This happened even as data showed that the American economy is in trouble. Numbers released this week showed that the new and existing home sales, personal spending and income, and durable goods orders weakened in November.
The volume in the financial market was lower today as more investors took a day off for the Christmas Eve. Most markets open for a few hours. Similarly, there were no major economic numbers that were released today. The most notable was the November industrial production data from Singapore and the interest rate decision by the Turkish central bank. Later today, the Japanese statistics bureau will release the November inflation and retail sales numbers.
The GBP/USD was in high spirits today after the Brexit deal. It is trading at 1.3575, which is the highest it has been this week. On the hourly chart, the price remains above the 25-day and 15-day exponential moving averages while the Relative Strength Index (RSI) has moved above the overbought level. The momentum oscillator has also continued to rise. Therefore, the pair will possibly continue rising, with the next target being at 1.3600.
The EUR/USD pair is little changed today, with many European markets being closed. It is trading at 1.2200, which is where it started the day at. On the hourly chart, it is slightly above the 25- day moving average and between the middle and upper lines of the Bollinger Bands. The signal and histogram of the MACD indicator have also moved above the neutral line. Therefore, the pair will possibly continue rising as bulls aim for the next resistance at 1.2250.
The EUR/AUD pair dropped to an intraday low of 1.6060, which was the lowest level since December 21. On the hourly chart, the price has moved below the 23.6% Fibonacci retracement level. It has also moved below the 25-day and 50-day exponential moving averages. The fast and slow lines of the Stochastic oscillator have also fallen. Therefore, the pair will likely continue falling as bears aim for the next support at 1.6050.