GBPBRL trade ideas
The mixed results produced by the United Kingdom’s economyThe mixed results produced by the United Kingdom’s economy this Tuesday didn’t prevent the British pound to the Brazilian real exchange rate from climbing higher in the sessions. The pair’s prices have been very bullish in recent weeks as Brazil faces a huge economic hurdle. As long as the pandemic continues to wreak havoc in the nation, the chances for bears aren’t looking good. It’s evident that bulls have the upper hand considering that the 50-day moving average has been trading significantly higher against the 200-day moving average. Moreover, it was just recently reported that Brazil surpassed the mark for 100,000 coronavirus deaths. It is currently the country with the second-highest number of deaths in the world and experts are saying that there is no sign of easing anytime soon. As for the UK, bulls received good news when the Bank of England recently said that it sees a less severe downturn for the British economy.
Hard Brexit could make the economic slump even deeperBears finally regained their momentum once again, and this time, it comes in a crucial time as the pound gets weighed on by Brexit concerns. This should lead the pair lower towards its support levels soon, forcing the 50-day moving average to slide and get closer to the 200-day moving average. Moreover, huge companies and corporations in the United Kingdom are warning that a hard Brexit could make the economic slump even deeper and cause the unemployment rate to jump unprecedentedly. The British government has reached a point of no return and companies are saying that it’s a huge gamble. BPM Johnson and his team only have less than six months to clinch a trade deal with the European Union, and this concerns a lot of investors, causing the sterling to falter in sessions. If a no-deal Brexit would be the case, companies would struggle to hold on to their workers, adding pressure to them as their still recovering from the pandemic.
The British pound continues to dominate the Brazilian realThe British pound continues to dominate the Brazilian real in the sessions. The Latin American currency stood no chance against the pound thanks to the recent promise of the British Prime Minister to rescue the economy. The pair is still extremely bullish and should reach its resistance level by the first half of July as the Brazilian real continues to depreciate. Moreover, it was recently reported that BPM Johnson vowed to spend billions of pounds to help save the United Kingdom’s economy. The British leader tweeted “We want to build our way back to health” sending signals for bullish investors to floor their gas pedals. Johnson promised to step up his agenda and provide people with new opportunities post-coronavirus pandemic. As for Brazilian real, bearish investors are cautiously moving as the country continues to see an alarming number of new confirmed coronavirus cases and death and has just had its worst week yet last week.
GBP/BRL exchange rate should reach its support in no timeThe recovery of the Brazilian real plus the ongoing Brexit deal concerns have pushed the pair lower today. Bears remain dominant as they seek redemption after the pair rallied to its highest levels. The British pound to Brazilian real exchange rate should reach its support in no time as the Brexit deal deadline is fast approaching. The pound sterling, just like other currencies that are matched up against the Brazilian real is doing fairly well in the forex market but terrible against the Latin American currency. The Brexit talks scheduled last week ended on an unfortunate stalemate, which is fueling the concerns of investors that the negotiation this month will fail as the European Council holds its summit later this month wherein the divorce should be discussed. Meanwhile, Brazil’s economic status is far from great. The country’s economy is heavily damaged by the pandemic and it is currently one of the countries with the greatest number of cases.
The British pound saw solid gains against its closest rivalsThe British pound saw solid gains against its closest rivals yesterday with GBP seeing better manufacturing results than Germany—the UK Final May manufacturing PMI came in a 40.7 against a previous estimate that sat around 40.6. Germany’s respective figure came in at 36.6, which was not only lower than the UK but also lower than market estimates. On that note, Brazil’s recent report of a lower quarterly economy in comparison to the last quarter of 2019 is set to push its currency down against sterling pound as long as the UK continues to see positive figures in the coming months. In fact, its GDP shrank 1.5% during that period, the first contraction since 2016, down against the revised 0.4% achieved the previous quarter. The UK also passed its crown as the coronavirus epicenter to Brazil, which could in many ways push the currency down against a number of rivals, especially the sterling pound.
The British pound to Brazilian real exchange rate slows downThe British pound to Brazilian real exchange rate slows down this Tuesday but is expected to continue to descend as bearish investors work to recover major losses from the pair’s first-quarter rally. Looking at the fundamentals around the pair, the main factor that’s limiting the gains of the Brazilian real is the political headwinds that can be traced to Brazil’s president, Jair Bolsonaro. The recently reported Supreme Court investigation on Brazil’s far-right president, his family, and his links has caused the controversial resignation of the federal police’s head and Justice Minister Sergio Moro. The unending controversies about the President are weighing on the Brazilian real. On the other hand, the British pound is relatively quiet yesterday as the United Kingdom was off for a holiday. And there also no crucial reports scheduled for the British economy this week, suggesting that the pound would very much rely on other fundamentals.
GBP/BRL will bounce back from a major support lineThe pair will bounce back from a major support line, sending the pair higher towards its all-time high. The United Kingdom and Brazil are in a race that both countries will not want to participate in. Brazil overtook the UK yesterday on the list of countries with most coronavirus cases. Brazil is now the third in the world with 293k cases while the UK has 248K. The rise in the coronavirus cases in Brasilia is expected to take a toll on its economy and currency. Aside from the record level cases, analysts and investors are also worried about the stance of President Jair Bolsonaro in COVID-19. The South American president downplayed coronavirus. He is currently searching for the country’s 3rd health chief since the coronavirus outbreak. The former chiefs were either fired or resigned to their recommendations to lockdown the Brazilian economy. Brazil’s president was previously criticized for downplaying the Amazon rainforest’s burning.
The British pound has closed the previous weekThe British pound has closed the previous week in a solid tone despite the shocking revelations regarding Britain’s two top officials. Bulls are projected to continue to advance in the trading sessions as the sterling disproportionally benefits from the risk appetite brought by the fall of the greenback. Also, the news about Boris Johnson and Matt Hancock contracting the deadly virus barely prevented the pound from running away with gains last week, suggesting the robustness of the currency. Just recently, an official from Britain stated that the lockdown may last for up to six months, adding that things would only get back to normal by autumn. This, however, still doesn’t faze bulls as the Brazilian real is seen widely underperforming in the market. Considering that the own president of the country is flouting the social distancing guidelines, investors are turned off as Bolsonaro prioritizes the economy before public health and safety.
