14:36, 11 April

Brexit Extension Agreed

For those of us who often monitor the ATR(14) on currency pairs, EURGBP was typically the lowest, ranging for example in 2014, between 30 and 65 pips.  Just after the Brexit referendum in 2016, this figure surpassed 170 pips briefly.  Just last month the ATR (14) went above 100 pips (the first time since December 2016).

Also, last month, EURGBP hit lows that we hadn’t seen in 2 years at around 0.847 from highs just after New Year’s, of 0.91.  Since then, the pair has been trending down and has remained consistently below the 100 and 200 day moving averages since mid-January.  The technical analysts in the crowd could easily draw a pennant showing consolidation and compression on the Daily or 4H chart but, let’s face it, EURGBP is a “fundamentals” game these days.

Just this morning, the EU and the UK have agreed to an Article 50 extension until 31 October of this year (and I will resist the temptation to draw any Hallowe’en parallels) but all the same scenarios, available to resolve this conflict, are still possible.  Any of the following will drive price action on any GBP and EUR pairs and we must consider, a) another referendum, b) a soft Brexit, c) Theresa May’s current deal, d) a further extension, e) a UK general election, or f) a no-deal Brexit.