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EUR/USD edges lower but GBP/USD slumps as Brexit news spooks investors

Brexit news has driven GBP/USD into reverse, while EUR/USD is struggling and USD/JPY has returned to its recent highs.

EUR/USD struggles in early trading

EUR/USD's limited bounce yesterday has stalled below $1.116, and further losses this morning suggest a test of $1.111 could be in the offing.

Below this, the price heads towards the 50-day simple moving average (SMA) at $1.1077, and then down towards $1.105 and trendline support from the September low. A rebound above $1.116 would provide a more bullish view and would target Thursday’s peak at $1.12.

GBP/USD slumps on Brexit news

The news that the UK government will stick to its end-2020 deadline for a new EU deal has not gone down well, with GBP/USD reversing its entire election night bounce.

The pair has now closed Thursday night’s gap up, and is now targeting the $1.31 area as support. A recovery above $1.32 might see some buying pressure develop, and for now the uptrend of the past month is still intact. A bigger retracement towards $1.28 would also still leave the post-August uptrend intact as well.

USD/JPY back to Y109.50

USD/JPY has tiptoed above ¥109.60, but a real push through ¥109.75 still eludes it.

However, there is little sign of bearish momentum, and with the 50-day SMA crossing above the 200-day SMA for the first time since July 2018, a more bullish view is emerging. Further gains head towards ¥110.35, horizontal and trendline resistance.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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