GBP closes with European currencies, favouring ‘Bremain’

Closing the gap

It appears that currency markets are now favouring ‘Bremain’ on heels of murder of British Member of Parliament Jo Cox. It is unclear whether this is a true reversal or some kind of retracement/short-covering/short-squeeze.

For now, GBP is closing its gap with European peers CHF, SEK, NOK and EUR.

GBP overlaid with CHF, EUR, SEK and NOK against USD shows gap closing

GBP overlaid with CHF, EUR, SEK and NOK against USD shows gap closing

The gap is now roughly 7% to the group against the USD. Recall that just 5 days ago, the chart looked like this. My own casual estimate for the entire gap to close is for EURGBP to undo YTD move to 0.7350.

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Brexit theme discussion; chart from 15 Dec 2015 to present

 

Cheapest in 30 years?

This 12-month chart of GBPUSD from 1981 shows the pair above 2 psychological levels.

  1. 1.4541 was the lowest end-of-year close since 1984. This level was printed in 2001. For long term bulls looking at continuation of 30-year status quo, GBPUSD at/above this level looks cheap-oversold.
  2. 1.4566 is former 52-week low printed on 13 April 2015. Again such a former 52-week low offers support and positive sentiment as long as price stays above.

    GBPUSD 12-month chart from 1981 - present

    If 30-year level remains unbroken, some consider GBPUSD ‘cheap’ | GBPUSD 12-month chart from 1981 – present

Elliott Wave International is offering a free report “How to invest for Brexit” here.

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Soh Tiong Hum is Director of TerraSeeds Market Technician Pte Ltd. TerraSeeds is a trading educator in Singapore since 2005.   Soh's Twitter account @sohtionghum was ranked #23 out of The Top 70 Twitter Accounts To Follow In 2015 by MahiFX.   Disclaimer notice: "I do not have a financial advisor's license. I am not qualified by any regulator to give financial advice. I do not know you the reader. Your investment means and motive may be different from me. My posts here are based on observations and meant for education. I am not responsible for for any consequence from your actions."
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