As we all now know the UK’s EU Membership Referendum resulted in a victory for the Leave campaign, 52% to 42%.


The immediate implications for Cable were severe, with an 1800 pip range during the early hours of June 24 tempered by a significant retracement up, now undone by a 200 pip gap south at the start of the new week’s Asian session.

No major UK economic releases this week and a strong focus on the realities and uncertainties of Brexit will likely leave Sterling very weak.

A few US releases of interest occur this week although their impact will be muted as Brexit draws attention.

US releases are:

Tuesday 28: GDP Final and Core PCE (13.30)
Wednesday 29: Core PCE Price Index and Personal Spending (13.30)
Thursday 30: Chicago PMI (14.45)
Friday: ISM Manufacturing (15.00)
(Times GMT +1)

These US releases will help determine whether US inflationary measures have suffered any more setbacks. It seems likely in the new Brexit scenario that any Fed rate hikes will not occur in July or in the Autumn immediately prior to the presidential election. Instead this leaves us with December which Fed Funds Futures implies is a 23% chance: so greatly reduced from predictions in the not too distant past which saw a 50%+ chance of a rise in June. Regardless of developments on Fed rate policy, it seems clear for the near future that the US economy is a significantly more known quantity than the UK’s.

Risk is most definitely to the down side with this pair and Brexit volatility will rule as ad hoc political news comes out around the implications of Brexit. Some news releases may support Sterling: the state of understanding around Brexit is extremely limited and it is possible that ideas will be floated that meet with speculators’ approval. However the much greater likelihood is prolonged chaos and sterling devaluation.

On that note the Bank of England has made clear that it has contingency plans and will take action to protect the economy, which may conceivably include intervention if GBP is hammered too badly in the coming days: be cautious selling anything other than retracements.


As Brexit defied market expectations there has been something of a “reset” of the charts.

Price is inhabiting low areas not touched for 3 decades or more, meaning a lack of static support and resistance except for large round numbers which will have to do for the moment.

Monthly Pivots for June can probably be forgotten too: since we are trading some 400 pips below monthly S3.

New pivots for this week indicate that price is below the weekly pivot and with such a strong bearish bias, S2 seems to be the logical target at 1.22.

An upper cap on the volatility appears to be around 1.4 which aligns with the weekly pivot and a descending support/resistance line which is a continuation of a previous long term down trend resistance line in play since September 2015.

With risk to the downside and high levels of volatility, pullbacks should provide opportunities to sell down to 1.20 – 1.25

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