Daily Market Recap - GBPUSD

The GBPUSD gapped lower at the start of the week on the back of increased concern that a trade deal between the UK and EU will not be reached anytime soon. The sharp drop in the cable completely erased hopes of a reversal suggested by last Fridays Doji candle, opening the door to a stronger correction below the significant 1.30 level.

Monday‘s session kicked off with Brexit uncertainty in the spotlight amid the latest news that the UK plans to amend the Brexit withdrawal agreement thereby reviving fears that the UK may walk away from the negotiation table mid-October. The GBPUSD will likely continue to slide throughout the week unless reassurances are given from the UK government that a walk-out won’t occur.

Volatility in the cable will remain high this week as markets await the UKs House of Commons inflation report on Tuesday as well as the US CPI data on Friday. A strong reading the US figures will likely continue to support the recent upsurge in the US dollar to the detriment of the British pound.

From a technical perspective, the GBPUSD‘s next point of interest will be its price action along the upward supportive trendline from August lows. A breach below it would likely increase sellers’ resolve to push towards the 1.30 mark seen as the ultimate support level in the past month.

(Chart Source: Tradingview 07.09.2020)

The main trend on the daily chart veered significantly lower following the break below Fridays indecisive candlestick. A close above the 0.5 Fibonacci retracement level at 1.32358 may re-entice buyers back into the GBPUSD though for now, we can expect sellers to remain firmly in control of the direction in the cable.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.