The pound jumped in the early trading hours today after UK Prime Minister Theresa May finally made Brexit breakthroughs as her cabinet agreed an approach to negotiations.
A collective position was adopted during a tense Friday meeting; however, tensions still continue to rise following the resignation of Brexit secretary David Davis. In a statement, Mr Davis said that May’s desire for having close ties with the European Union is a betrayal to the British people who voted for Brexit. He is not alone in his anguish. Yesterday, it emerged that UK Foreign Secretary, Boris Johnson, was also not pleased with the deal.
Shifting gears to America, the dollar slumped against the euro in morning trading hours. This came after Friday’s jobs numbers from the United States. The unemployment rate climbed to 4.0%, which was higher than the previously released 3.8%. The euro is now trading at the highest level since mid-June against the dollar.
The Canadian dollar is strengthening against the US dollar following the impressive jobs numbers from Canada. The numbers released on Friday showed that more than 31,000 people were employed during the month of June. This came after a disappointing jobs report for May which revealed that more people were fired than those hired. Traders are now expecting the Bank of Canada to change tune when its MPC delivers their interest rates decision.
EUR/USD
The EUR/USD pair is currently trading at 1.1763, which is the highest level since mid-June. The price is above the 21 and 42-moving averages. It is approaching the higher bond of the Bollinger bands, which is currently priced at 1.1776. The pair has an RSI of 67. All this means that while the pair has some more upside to go, traders should focus on the upper Bollinger bands level, where a correction could happen.
GBP/USD
The GBP/USD pair jumped and is currently trading at 1.3296, which is slightly lower than the intraday high of 1.3316, which is also an important resistance level. The pair is now trading above the 50-day moving average level with the RSI slightly below the 70 level. It has dropped from the upper Bollinger band level. Therefore, the pair is likely to continue moving lower to the middle Bollinger band level at 1.3270. However, traders should stay ahead with the news as political leaders from the UK react to the Brexit deal hammered by Theresa May.
USD/CAD
The USD/CAD level has continued the descent started on Friday after jobs numbers were released by Canada. It is now trading at the important support level of 1.3085, which is lower than the 21 and 42-day moving averages as shown below. As the BOC nears its interest rates decision, traders are likely to push the pair lower with the expectations that the BOC will turn hawkish. If it does, the pair’s next support level will likely be 1.2860.
