Daily Forex Market Preview, 03/10/2016
The British pound opened today on a weaker note following the British PM Theresa May confirming over the weekend that the UK will start the negotiations to leave the EU by March 2017. The news put to rest the rumors about a delayed process and now is likely to see the UK conclude its pull out from the EU by as early as March 2019. The GBP gapped down lower across the board at today's open.
GBPUSD (1.1217): GBPUSD closed Friday with a spinning bottom candlestick pattern with today's lower open. However, prices are seen reclaiming the losses, with GBPUSD attempting to post steady gains. On the 4-hour chart, after the previous doji candlestick was formed, price action in GBPUSD closed bulish. The Stochastics on 4-hour chart is also attempting to post a higher low against the lower low in price. This could indicate a near term correction to the upside, but 1.3000 resistance is likely to cap the gains for now. Further downside can be expected on a daily close below 1.2921, in which case, the round number support at 1.2900 will be most likely to hold the declines.
XAUUSD (1315.35): Gold prices briefly touched 1315 support on Friday but today's price action could see prices continuing to hover around the 1315 support. Gold prices are seen testing the major support level of 1315 - 1300 which marks the support off the descending triangle pattern on the daily chart. A breakdown below 1300 could spell further weakness in the precious metal. On the 4-hour chart, the minor support at 1314 - 1312 remains critical as a breakdown below this support could trigger further downside to 1306 - 1300. In the event of support holding out at the current levels, expect a rebound in gold prices back to 1327.50.
EURGBP (0.8679): EURGBP broke above the resistance level of 0.8671 and tested the previous highest low at 0.8690. As long as this price level is not breached, we could expect some downside in prices with 0.8600 support to the downside a likely target. Despite the initial knee jerk reaction to the Brexit news, economic data will also play a role as UK manufacturing PMI for September will be released today.