Daily Market Recap - GBPUSD

The GBPUSD reached a new daily top around the 1.2840 marks early in the European session on Monday before giving up most of its gains in the following hours.

The pair was lifted higher after a member of the Bank of England brushed aside the idea of negative interest rates, relieving pressure on the Pound bulls. However, the GBPUSD rally was short-lived in the end as worries of a no-deal Brexit and rising COVID-19 cases in Europe are not painting a nice outlook for the British Pound.

Over in the UK, the next round of trade negotiations with the EU will be taking place this week, with both sides under immense pressure to come to an agreement before October 15th –the self-imposed deadline to provide enough time for parliaments to ratify the treaty.

A positive conclusion to these talks would lift the Pound higher as the UK would avoid a messy transition from the European Union. Investors will likely be preparing for the worst and staying away from any long positions until further clarity is felt. Without any significant UK economic data this week, the GBPUSD will particularly take its cue from developments in the trade negotiations.

From a technical perspective, the pair is stabilizing along with the 0.786 Fibonacci retracement level at 1.28492. The main trend remains down though todays performance has pushed momentum towards a more neutral position. The GBPUSD will likely continue to depreciate in the coming sessions should no progress be made in the trade negotiations, with the lower support of 1.26766 the bearish target for now.

(Chart Source: Tradingview 28.09.2020)

On the flip side, a return above the 1.30 level seems to be the only way to entice a bullish reversal back in GBPUSD. Before that, the downward sloping moving average should serve as an adequate resistance trigger to contain short term rises in the pair.

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.