Daily Market Recap - GBPUSD

The British Pound is falling from its monthly highs on Tuesday as the GBPUSD dips 0.83 percent late in the session. The pair crossed below the supportive 1.30 level as investors worry over the lack of progress in the Brexit trade deal and an overall fall in risk sentiment in the market.

After last week‘s advance, economic uncertainties and a recent surge in covid-19 cases have been weighing on the GBPUSD. New restrictions on movement in the UK have been announced under a three-tier covid-19 alert system. While they aren’t as strict as feared, the risk remains that tougher rules can be imposed in the weeks/months to come.

On the economic calendar, the UK job markets report was released today and gave us a rather lukewarm data. The claimant count change for September came in firmly below consensus though the 3-month ILO unemployment rate fell short of expectations at 4.5%.

In Brexit news, little signs are showing that a deal will be reached before the October 15th deadline, weighing on the prospects of the British Pound. Investors are bracing for the strong likelihood that the UK will leave the EU without a deal.

From a technical perspective, the GBPUSDs next big downside test will be the 20-day EMA which should offer strong support. The trend on the pair remains up on the daily chart for now with traders likely to be looking at a consolidation move in the pair along the 1.29-1.30 channel.

The RSI chart is pointing to neutral conditions suggesting available opportunities in either direction. Should the GBPUSD fail to break below the support zone above the 1.28514 level, then the test of 1.30 would remain feasible before the end of the week.

(Chart Source: Tradingview 13.10.2020)

With it being a quieter week than usual in the economic data front, traders will strongly take their cue from political developments in the US fiscal stimulus plan and UK Brexit deal. Traders should expect higher volatility in the GBPUSD going forward.

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.