Cable keeps pattern, EUR/USD stays around 1.1200 handle

12 Aug 2019

As British members of parliament start applying pressure on the government to extend Article 50, Brexit, the GBP/USD pair is being valued at the 1.2050 handle. The trade war dispute is having effects on the Euro and the Chinese Yuan. 

In hopes of leaving the EU with an agreed deal, British MPs want to extend the deadline to Article 50 of the Treaty on European Union (TEU). On Friday, the country’s GDP led the Pound to a downfall amid negative news surrounding Brexit and its consequences. The Industrial and Manufacturing Production continued to weaken the currency. With traders now hopeful of the MPs pressure on government, the pair stopped its decline. Investors are also keeping an eye on the ongoing trade war between the U.S. and China. 

Despite growing concerns about the trade war and the Italian political scene, the EUR/USD pair managed to stay around the 1.1200 handle. The pair looks to be at a steady performance having a neutral outlook. Breaking the pennant pattern would boost and recover the EUR/USD pair from dropping to low-1.1000s. The pair may have a similar positive experience to Friday as it could potentially gain if Trump decides to intervene in foreign exchange after China allowed the Yuan to fall below 7 per US Dollar. 
   
The People’s Bank of China continued to weaken the Yuan after setting the official midpoint reference for the currency at 7.0211 per dollar. Zhu Jun, Director-General of the PBOC’s International Department said, ‘The yuan’s move was a normal reaction to Trump’s tariff threat…The Chinese economy was resilient and capable of coping with various situations.’ Onshore yuan was being traded at 7.0613 against the dollar whereas the offshore yuan at 7.0887. The weaker currency will result in cheaper exports.