USDCAD & GBPUSD, H1
USDCAD traded to two-week lows of 1.3225 (S1) in early North American trade, down modestly from early Asian highs of 1.3253. Perkier oil prices provided some support to the CAD in London morning trade. USDCAD closed right on its 20-day moving average on Monday (August 26) for the first time since July 22, a close below this key technical level is seen as a USDCAD bearish development. The levels (1.3260 and 1.3300) would become resistance, with support at 1.3200, (S2) and the August 12 low.
Meanwhile, Cable breaks Friday’s high at 1.2293 and over the psychological 1.2300 as UK Opposition parties agree to stop a No-Deal Brexit. Cable has continued to gain momentum from this morning’s breach of the 20-period moving average, Daily Pivot at 1.2235 and R1 at 1.2267.
Much of the anti-no-deal group’s focus now centres on preventing a no-deal by legislation, along with strategising on ways to stop the prime minister proroguing (temporarily shutting down) parliament in September. Battle will commence next Tuesday, (September 3) when parliament reopens after the summer break. Given the level of support in parliament for ruling out the no-deal option, including some members from the government’s own Conservative Party, there is a reasonable chance that no-to-no-deal members will succeed. If a no-deal Brexit is legislated off the table, this would increase the odds of there being an extension, which in turn would put Prime Minister Johnson, having promised to deliver Brexit on October 31 “no ifs or buts,” in a difficult position, from which, he would be highly tempted to call a general election. An autumn general election looks the mostly likely of all the outcomes, but time will tell.
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Stuart Cowell
Head Market Analyst
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