Before of the Bank of England’s announcement of its monetary policy decisions on Thursday, the Cable was benefiting from investor risk appetite and the dollar’s weakening. These causes allowed the GBPUSD to achieve stronger gains, pushing it to the 1.3564 resistance, its peak level since May 2018. These gains come at a crucial time, as financial markets wait with caution and pessimism regarding the possibility of a Brexit trade agreement between the European Union and Britain.
The performance of the pound is affected by the stalled Brexit negotiations, Covid-19 restrictions and the continuous stimulation of the British economy which was delayed in the face of the pandemic.
The Cable extended its gains in the market among news reports that the post-Brexit trade deal was close to completion. The contents of the briefing given by European Commission President Ursula Von Der Leyen to the European Parliament saw positive momentum for the British pound, but news reports that negotiations are still pending on fisheries, meaning that the deal is still not reachable.
Technically, the GBP/USD pair is moving inside a strong bullish channel. There is a clear disregard for the technical indicators moving into strong overbought areas, and the sterling will maintain its gains until the final announcement on Brexit. So far, the markets are pricing in the possibility of reaching an agreement. Consequently, do not be surprised that if an agreement is reached, the pound will not achieve much more, as the investor’s view will then shift to the economic performance in the era of Covid-19. So far, the closest targets for the bulls are 1.3575, 1.3625 and 1.3700, respectively.
On the downside, according to the performance on the daily chart, a break below the 1.3365 support will have a negative impact on the current performance.
For the British pound, focal point will be on the announcement of the Bank of England’s monetary policy decisions. For the USD, economic releases will include the housing market numbers, building permits and housing starts, then reading the Philadelphia Industrial Index and the weekly jobless claims.
Warning:
Trading on CFDs involves a high level of risk, including full loss of your trading funds. Before proceeding to trade, you must understand all risks involved and acknowledge your trading limits, bearing in mind the level of awareness in the financial markets, trading experience, economic capabilities and other aspects.
Disclaimer:
Market Trends, Charts, Trading Ideas or other information provided by BKFX (Pty) Ltd and/or third parties are not intended as an investment advice and/or recommendation. The information provided is not presented as suitable or based on your specific need. You are responsible for your own investment decisions and you should not trade with money you cannot afford to lose. Any views or opinions presented in this Article are solely those of the author and do not necessarily represent those of the Company, unless otherwise specifically stated. The Company may provide the general commentary which is not intended as an investment advice and must not be construed as such. Seek advice from a separate financial advisor if an investment advice is needed. The Company assumes no liability for errors, inaccuracies or omissions, inaccuracies or incompleteness of information, texts, graphics, links or other items contained within this article/material.