Daily Market Recap - GBPUSD

The British Pound is falling against the US Dollar on Thursday on the back of Brexit jitters and underwhelming macroeconomic figures. The GBPUSD is trading down 0.77 percent at the time of writing.

Looking at the fundamentals, a few factors may be to blame behind the performance of the GBPUSD starting with the lackluster economic data released earlier in the day. The UK quarterly GDP figures came in slightly below expectations at 15.5 percent though the manufacturing numbers took a big hit rising only by 0.2 percent, 0.8 off of the consensus.

Another factor driving the GBPUSD is the news that the UK declared earlier today that a new law passed in Hong Kong which allows the disqualification of elected officials over national security reasons constitutes another breach of the China-UK joint declaration. The move by the UK has once again strained relations with one of its most important trading partner China.

Lastly, Brexit news is once again ramping up pressure on the GBPUSD as further evidence of gridlock in trade negotiations has prompted caution amongst traders. EU diplomats are sounding more pessimistic, as one was quoted saying “two weeks ago it seemed more positive. Now the only thing thats moving is time.” This followed reports that the EU and UK will likely miss their deadline for a deal on the 15th of November.

From a technical perspective, the main trend in the GBPUSD is up on the daily chart albeit short-term momentum is beginning to tip in favor of the bears. Follow through selling below the 1.308 support level would seal the fate in the pair for a further dip towards the 1.29864 marks.

(Chart Source: Tradingview 12.11.2020)

The immediate support around the 1.30813 level will have to hold in order for bulls to have a shot at maintaining the current range of 1.30-1.33. Although we will likely see the GBPUSD stabilize more between the 20 day MA and the 0.5 Fibonacci retracement level at 1.30813. Value pickers should return to the fray around the 1.30 mark as the pair seems vulnerable to further losses in the short term.

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.