United Kingdom political drama causes wild sterling fluctuations
The British pound fell to its weakest level against the US dollar in over three years this week, as UK political drama caused more wild fluctuations in sterling. The British pound fell below the 1.2000 level against the US dollar, hitting 1.1960, as traders increased bearish bets over fears of a hard-Brexit. The GBPUSD pair quickly recovered back above the 1.2300 level as British PM Boris Johnson lost his first major battle in UK Parliament. PM Johnson’s political opponents vowed to stop the United Kingdom leaving the European Union without a deal on October 31st, boosting the GBPUSD pair and UK equities.
- The GBPUSD pair is only bearish while trading below the 1.2195 level, key support is found at the 1.2020 and 1.1960 levels.
- If the GBPUSD pair trades above the 1.2195 level, buyers may test towards the 1.2350 and 1.2380 resistance levels.
Bitcoin started the new trading month with an upbeat tone as bulls moved the number cryptocurrency back towards the $11,000 level. Bitcoin had opened the month of September around the $9,500 level, but quickly found buying interest above the psychological $10,000 level and erased the losses incurred during the August 28th decline. Bitcoin’s overall market dominance increased to two-years highs, as the BTCUSD pair outpaced the major altcoins in terms of overall weekly gains. Technical analysis suggests a move above the $11,000 level could spark a major new bullish trend.
- The BTCUSD pair is only bullish while trading above the $10,000 level, key resistance is found at the $11,000 and $11,700 levels.
- The BTCUSD pair is only bearish while trading below the $10,000 level, key support is located at the $9,400 and $9,1000 levels.
Central bank action
The Reserve Bank of Australia kept interest rates unchanged at one percent this week as widely expected, following a series of recent rate cuts from the central bank. The RBA policy statement noted that the policymakers will act further if economic conditions worsen. The Bank of Canada also kept rates on hold this week, which helped to push the Canadian dollar higher on the foreign exchange market. A lack of dovish commentary from the central banks Governor, Stephen Poloz, helped to push back expectations of an interest rate cut next month.
- The USDCAD pair is only bearish while trading below the 1.3290 level, key support is found at the 1.3200 and 1.3160 levels.
- If the USDCAD pair trades above the 1.3300 level, buyers may test towards the 1.3382 and 1.3400 resistance levels.
The US dollar index fell from a two-year trading high this week after the ISM Manufacturing survey came in much weaker-than-expected. The US dollar had hit multi-year trading highs against the euro currency and the British pound before correcting lower on the bearish ISM manufacturing print. The ISM survey showed that US Manufacturing activity contracted last month, marking the first negative number since 2016. Data inside the survey also showed a sharp decline in sentiment from American businesses.
- USDJPY is bullish while trading above the 106.40 level, key resistance is found at the 107.00 and 108.10 levels.
- If the USDJPY pair trades below the 106.00 level, key support is located at the 105.40 and 105.00 levels.