Pound soars as traders start to factor in Article 50 extension
The British pound moved to its highest level against the US dollar since September 2018 this week, as financial market participants started to factor in the possibility of UK lawmakers extending the Article 50 agreement. British PM Theresa May confirmed that if her latest Brexit deal is rejected this month, she will hold a vote in UK Parliament, where UK lawmakers can decide on a limited extension of the United Kingdom’s departure date from the European Union. The British pound also made strong gains against the euro and Japanese yen currencies, as investors hoped the possible delay could give UK and EU negotiators more time to work out a potential Brexit deal.
- The GBPUSD pair is strongly bullish while trading above the 1.3300 level, key resistance is found at the 1.3400 and 1.3450 levels.
- If the GBPUSD pair trades below the 1.3300 level, further losses towards the 1.3230 and 1.3160 levels remain possible.
The greenback remained volatile on the foreign exchange market this week, as Federal Reserve Chair Jerome Powell testified before the Senate Committee. Chair Powell warned that problems overseas could impact the United States economy, although he noted that the United States economy remained strong and the current outlook of the economy was and said the outlook was favorable. Markets shifted their focus away from the Fed Chair, as geopolitical tensions captured the headlines after Pakistan shot down two Indian jets. Investors also reacted positively to better than expected US GDP data, with the US dollar soaring higher against the Japanese yen currency.
- The USDJPY pair is strongly bullish while trading above the 111.40 level, key resistance is found at the 111.80 and 112.30 levels.
- If the USDJPY pair trades below the 111.40 level, sellers may test towards the 111.00 and 110.60 support levels.
The broader cryptocurrency market moved lower this week, after starting the trading week under heavy technical selling pressure. Bitcoin reversed sharply from the $4,000 level in early week trade, before eventually finding support from the $3,700 support level. Ethereum also came under heavy selling pressure, with the second largest cryptocurrency briefly dipping below the $130.00 level. Overall, cryptocurrencies made strong gains during the month of February, with Litecoin advancing towards the $50.00 level and gaining over forty percent on a monthly basis.
- The BTCUSD pair is bullish while trading above the $3,700 level, key resistance is found at the $4,200 and $4,600 levels.
- If the BTCUSD pair trades below the $3,700 level, sellers may test towards the $3,500 and $3,330 levels.
US President Donald Trump extended the deadline for Sino-US trade talks this week, giving Beijing and Washington negotiators more time to hammer out a trade deal. Financial markets reacted positively to the news, although optimism remained low that a meaningful trade deal would quickly be struck between the world’s two largest economies. The Chinese economy also posted more soft economic data this week, with Chinese Manufacturing PMI falling into contraction for the third straight month, marking the lowest official Chinese Manufacturing PMI in three years.
- The USDCAD pair is only bullish while trading above the 1.3160 level, key resistance is found at the 1.3220 and 1.3265 levels.
- If the USDCAD pair declines below the 1.3160 level, sellers may test towards the 1.3050 and 1.2990 support levels.