GBP: in expectations of Brexit, Oil affected by military actions in the Middle East

Hello dear traders! My name is Alina. I’m a financial advisor at AMarkets. Today I would like to share trading ideas for the current week.

The British pound was the growth leader in the foreign exchange market last week. The pound soared by more than 220 points against the US dollar in less than 3 hours. This has been the sharpest rise of the GBP in more than two years.

High volatility of the currency pair was due to the reaction of market players to the results of negotiations between the Prime Ministers of Great Britain and Ireland. The leaders are convinced that it is possible to reach an agreement on Brexit. The UK is scheduled to leave the EU on 31 October 2019. The British Parliament has passed a law according to which the Prime Minister Boris Johnson will ask Brussels for a three-month delay, if the Brexit deal with the EU is not agreed upon by October 19. However, Boris Johnson is confident that he will be able to get it done without delay.

The GBP commenced a downtrend after a sharp rise amid the recent EU comments that Boris Johnson’s Brexit plan was not good enough. We expect the GBPUSD to correct to the local support level at 1.2440 in the coming days.

Brent oil prices increased by 4% last week. The growth of “Black Gold” is explained by the beginning of the Turkish military operation in Syria. Turkey officially announced the beginning of the military operation in Syria last Wednesday, a few days after the U.S. decision to withdraw its troops. Brent also broke the psychological barrier at $60.00 on Friday after the bombing of an Iranian tanker near the coast of Saudi Arabia. An additional driver for oil growth was a modest increase in the number of oil rigs in the U.S. – the number of active oil rigs rose by two to 712.

We expect oil prices to keep ascending to the local resistance level of $61.50 during the next week.

This week we expect statistics from the UK (the Average Earnings and Unemployment Rate), New Zealand (Consumer Price Index) on Tuesday, Consumer Price Index in the Eurozone and UK on Wednesday, Australian employment and unemployment rates, the UK Retail Sales and building permits in the U.S. on Thursday. But the main event of the week will be the results of Brexit negotiations between the UK and the EU leaders. This event can reverse the current trend and create new trading opportunities.
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To sum up, here are our targets for:
GBPUSD – sell up to 1.2440
BRENT – buy up to $61.50