Watching the trend lower in GBP/AUD as the odds rise of a no-deal Brexit.
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on GBP/USD as Brexit headlines continue to come in, so be sure to check that out to see if there is still a potential play!
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Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar
Bank of England Financial Stability report at 5:00 pm GMT
Japan Producer Price Index at 11:50 pm GMT, BSI Large Manufacturing Index at 11:50 pm GMT
Australia Consumer inflation expectations at 12:00 am GMT (Dec. 10)
RBA Bulletin at 12:30 am GMT (Dec. 10)
What to Watch: GBP/AUD
On the one hour chart above of GBP/AUD, we can see the pair recently broke below the support area around the 1.8030 handle, retested, and failed to rally. This is a bearish signal for the pair, that could not only draw in technical sellers but also fundamental ones if headlines on Brexit deal negotiations continue to sour.
Trading on the outcome of Brexit negotiations is a highly uncertain endeavor, but one that could be potentially rewarding for GBP/AUD bears if the result is indeed a no-deal Brexit scenario.
It’s probably best for traders to stay glued to Brexit headlines before jumping in the pair, but for those who are looking get in ahead of a potentially negative outcome for the British pound, do it safely by starting with nibbler positions and scaling into a bigger position if the market does go your way.
Ahead, we should get more and more updates quickly on the session as negotiations are currently no likely to go beyond today, as stated by Michel Barnier, the EU’s Chief Negotiator. If a no-deal looks like an outcome by the end of the session, Sterling could find more sellers quickly if that scenario plays out later.
But if it turns out negotiations will extend beyond today, the earlier drop in Sterling could rebound and find resistance again around the 1.8030 handle.
And in the highly unlikely chance of a deal done today, Sterling is likely to rally, at which a break above 1.8030 should be easy for the bulls, with a move to potentially the 1.8100 – 1.8200 given the daily ATR of around 150 pips.