Pessimism on Brexit deal impacts cable

Britain has set a deadline of Oct. 15 to strike a free-trade deal with the European Union, and if none is agreed both sides should “accept that and move on,” UK Prime Minister Boris Johnson will say on Monday. Britain left the EU on Jan. 31 but there has been little progress on a new trade deal after a status-quo transition arrangement ends in December.

Talks, which have stalled over Britain’s insistence that it has full autonomy over state aid and fishing, are due to resume in London on Tuesday. French Foreign Minister Jean-Yves le Drian said a trade agreement needed to be reached urgently and he blamed the stalemate on Britain’s attitude.

Johnson will say there is no sense in thinking about timelines beyond Oct. 15.”If we can’t agree by then, then I do not see that there will be a free trade agreement between us, and we should both accept that and move on,” he will say, according to comments released by his office.

If no deal is agreed, Britain would have a trading relationship with the bloc like Australia’s, which would be “a good outcome”, Johnson will say.”As a government we are preparing, at our borders and at our ports, to be ready for it,” he will say. “We will have full control over our laws, our rules, and our fishing waters.”

Adding to it, The U.K. reported 2,988 new corona virus cases on Sunday, a 64% jump from the previous day, and the highest level since May 22. The surge comes as children return to school and the government has started a campaign to get workers back to their offices, especially in city centers, to help the economy recover.

The total now stands at 347,152 cases. Two more people died after testing positive, bringing the number of fatalities linked to the virus to 41,551. Before Sunday, the U.K. had reported an average of about 1,600 new cases in the past week. The number of new cases has tended to dip on weekends when reporting is more limited.

GBP/USD 4 Hour Chart:

Support: 1.3195 (S1), 1.3114 (S2), 1.3052 (S3).

Resistance: 1.3338 (R1), 1.3400 (R2), 1.3481 (R3).

All these catalysts breaks the investors’ confidence against cable. We expect a bearish trend for GBP/USD.

USD/JPY Weekly Forecast (7th September 2020 – 11th September 2020)

Fundamental view:

The USD/JPY has rallied significantly during the course of the week, reaching towards the 106.50 level. Japan Unemployment Rate, Final Manufacturing PMI on 1st Sept and Trade Balance on 3rd Sept favored uptrend for the pair whereas US ISM Manufacturing PMI, Wards Total Vehicle Sales monthly report  on 2nd Sept and US Factory Orders quarterly report on 4th Sept favored downtrend for the pair.

A bit of volatility is expected in the upcoming week with the reaction to the jobs number.

The major economic events deciding the movement of the pair in the next week are Japan Final GDP quarterly report at Sep 07, US IBD/TIPP Economic Optimism at Sep 08, Japan Producer Price Index (PPI) yearly report, Unemployment Claims, Crude Oil Inventories at Sep 10, and US Core CPI monthly report at Sep 11.

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.37% lower than the previous week. Maintaining high at 106.55 and low at 105.29 showed a movement of 126 pips.

In the upcoming week we expect USD/JPY to show a bearish trend. The currency pair is trading above the 200 Simple Moving Average and the MACD trades to the downside. A solid breakout below 105.50 may open a clean path towards 104.76 and may take a way down to 104.24. Should 106.76 prove to be unreliable resistance, the USDJPY may raise upwards 107.28 and 108.02 respectively.  In H4 chart, Formation of flag pattern indicates reversal of the trend creating prospects of a bearish trend Along with a dark cloud cover formation braces our expectation.

Preference
Sell:  106.56 target at 105.30 and stop loss at 107.01

 

Alternate Scenario
Buy: 107.01 target at 108.15 and stop loss at 106.56

GBP/USD Weekly Forecast (7th September 2020 – 11th September 2020)

Fundamental view:

The British pound tried to form rally in the week initially but later fell down to 1.3 levels. Britain Nationwide HPI on 1st Sept and Britain Nationwide HPI monthly report on 2nd Sept created an uptrend for the pair whereas US Factory Orders monthly report on 2nd Sept and Britain Construction PMI on 4th Sept favored downtrend for the pair.

Bank of England officials have warned that the recovery from the economic slump may extend. This recent news pressurizes against greenback and we expect a bearish trend for GBP/USD in the upcoming week.

The major economic events deciding the movement of the pair in the next week are US IBD/TIPP Economic Optimism at Sep 08, UK NIESR GDP Estimate, Unemployment Claims, Crude Oil Inventories at Sep 10, UK Manufacturing Production monthly report, and US Core CPI monthly report at Sep 11.

GBP/USD Weekly outlook:

Technical View:

Last week’s high was 0.94% higher than the previous week. Maintaining high at 1.3482 and low at 1.3175 showed a movement of 307 pips.

In the upcoming week we expect GBP/USD to show a bearish trend.  The currency pair is trading above the 200 Simple Moving Average and the MACD trades to the downside. A solid breakout below 1.3140 may open a clean path towards 1.3005 and may take a way down to 1.2834. Should 1.3447 prove to be unreliable resistance, the GBPUSD may raise upwards 1.3618 and 1.3753 respectively. In H4 chart, the breakout of the descending triangle pattern to the downside favors bearish expectation. Also to be noted shooting star formation exerts the expectation of downtrend for the pair.

Preference
Sell: 1.3303 target at 1.3009 and stop loss at 1.3452

 

Alternate Scenario
Buy:  1.3452 target at 1.3751 and stop loss at 1.3303

AUD/USD Weekly Forecast (7th September 2020 – 11th September 2020)

Fundamental view:

The AUD/USD pair has reached this week 0.7413 on Monday, a level that was last seen on August 2018. The greenback, however, began recovering afterwards, partially due to its extreme oversold conditions and partially due to an improved market mood. Australia Company Operating Profits on 31st August and Australia Building Approvals monthly report on 1st Sept created a bullish environment whereas Australia GDP quarterly report on 2nd Sept, Australia trade balance on 3rd Sept favored bearish environment for the pair.

The market will be volatile in the upcoming week we expect the pair to show a pullback in the upcoming week.

The major economic events deciding the movement of the pair in the next week are NAB Business Confidence, US IBD/TIPP Economic Optimism at Sep 08, Australia Westpac Consumer Sentiment at Sep 09, Unemployment Claims, Crude Oil Inventories at Sep 10, and US Core CPI monthly report at Sep 11.

AUD/USD Weekly outlook:

Technical View:

Last week’s high was 0.65% higher than the previous week. Maintaining high at 0.7413 and low at 0.7222 showed a movement of 192 pips.

In the upcoming week we expect AUD/USD to show a bearish trend.  The currency pair is trading above the 200 Simple Moving Average and the MACD trades to the downside. A solid breakout below 0.7200 may open a clean path towards 0.7115 and may take a way down to 0.7008. Should 0.7391 prove to be unreliable resistance, the AUDUSD may raise upwards 0.7498 and 0.7583 respectively. In H4 chart Inverted cup and handle pattern favors prospects of a bearish trend. Also to be noted shooting star formation exerts the expectation of downtrend for the pair.

Preference
Sell: 0.7303 target at 0.7119 and stop loss at 0.7396

 

Alternate Scenario
Buy:  0.7396 target at 0.7581 and stop loss at 0.7303