Two trades to watch FTSE GBPUSD ahead of expected Brexit trade deal

Brexit trade talks continued overnight between the EU and the UK and an agreement is expected to be unveiled today. The deal document, which is being finalised in the early hours of this morning is expected to be around 2000 pages long. If agreed, both sides will have until 31st December to approve the deal.

FTSE points to stronger start

• FTSE rallied 0.6% on Tuesday as Brexit rumors swirled and on news that a deal could be imminent.
• FTSE set for a positive start again today, markets close half day.
• Brexit stocks which are closely tied to the performance of the UK economy such as banks, house builders, retailers and airlines rallied hard in the previous session and will remain in focus.

The FTSE continues to trade within and ascending channel dating back to early November. The index also trades above its 50 and 100 sma suggesting that there is more upside on the cards. The 50 sma also crossed above the 100 sma again, another bullish indication.

Immediate resistance can be seen as 6600 (high 18th Dec) before 6645 (December high) prior to 6850 (March high).

It would take a move below the lower band of the ascending channel at 6435 to open the door to 6300 horizontal support which has offered support since early November and then 6245 December low and 50 sma.

Learn more about trading indices.

Where next for GBP/USD on Brexit news?

• GBP/USD rallied to fresh weekly highs on expectations of a Brexit deal
• Hopes of an imminent deal are boosting sterling, whilst falling safe haven demand is dragging on the US Dollar

GBP/USD rallied to an intraday high of 1.3570 overnight and has eased back slightly to 1.3550. The pair continues to trade in its ascending channel dating back to mid September and also trades above its 50 & 100 sma – a bullish trend.

Immediate resistance can be seen at 1.3625 last week’s swing high and the upper band of the ascending channel. A break through here could clear the way for a move towards 1.37 a level not seen since early 2018.

On the flipside, immediate support sits at 1.35 psychological number, prior to horizontal support at 1.3440 and 1.34. It would take a break below 1.3330 the lower band of the ascending channel to negate the bullish trend.

Learn more about trading forex

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.