GBP/USD Forecast: Brexit talks remain in darkness on Black Friday, bullish triangle in danger

GBP/USD has been retreating from the highs as Brexit talks remain stuck.
The greenback remains under pressure amid transition and vaccine optimism.
Black Friday's four-hour chart is showing that cable is at risk of falling off the ascending triangle.

Yohay Elam FXStreet

Is it just darkest before a Brexit dawn or are talks about to fall apart? Chief EU Negotiator is traveling to London for in-person talks after completing his quarantine, yet that is the only bit of positive news coming from the negotiations.

UK Prime Minister Boris Johnson has said that the likelihood of a deal depends on the EU and that Britain would prosper with or without an agreement. His comments follow similar finger-pointing by an unnamed EU official who said that there are disagreements on the known topics of fisheries, governance, and setting a level-playing field.

Similar to European Commission President Ursula von der Leyen, Barnier was quoted as saying he does not know if a deal is possible. GBP/USD has reacted to the news with a fall, yet there while both sides continue talking, there is hope.

Everything else favors gains for cable. With the upcoming expiry of the nationwide lockdown, London will return to Tier 2 rather than struggle under more severe Tier 3 terms. UK coronavirus cases continue their downtrend.

While COVID-19 statistics are moving in the wrong direction – a new record of over 90,000 hospitalizations was recorded on Thanksgiving – investors cheer an upbeat political development. President Donald Trump said he would leave the White House if the Electoral College votes in favor of President-elect Joe Biden. The safe-haven dollar is under pressure amid greater political certainty.

Markets also remain hopeful about a vaccine, despite some confusion from the recent data released by AstraZeneca and the University of Oxford. The better efficacy rate of 90% was seen only in a smaller group of people aged 55 or younger. Nevertheless, the British regulators are set to approve the immunization, pending more data.

Overall, Brexit is driving sterling lower while everything else is pointing in the other direction.

GBP/USD Technical Analysis

Pound/dollar is dipping below the bullish ascending triangle. The breakdown is yet to be confirmed, but upside momentum on the four-hour charge is already fading.

Support awaits at 1.3310, which was a double-top and now converges with the 50 Simple Moving Average. It is followed by 1.3265 and 1.3245, which worked as cushions earlier in November.

Resistance is at the recent high of 1.3397, and then by September's peak of 1.3495. Close by, the December 2019 high of 1.3510 awaits.

More GBP/USD Three reasons to expect a sustained Santa rally for sterling

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

AUD/USD turns south toward 0.6900 as USD firms up

AUD/USD sees fresh selling and drops toward 0.6900 in late Asian trading on Monday, as renewed US Dollar strength weighs on the pair amid lingering Middle East and Russia-Ukraine geopolitical tensions. Focus remains on Oil prices, Treasury bond yields, and RBA expectations for fresh trading impetus in the major.

USD/JPY retakes 158.00 amid hawkish BoJ bets, firmer USD

USD/JPY erases losses and retakes 158.00 in the Asian session on Monday, trading within a one-week-old range. Geopolitical uncertainty continues to underpin the US Dollar, despite fading Fed rate hike hopes, supporting the pair's rebound. However, further upside could be capped by hawkish BoJ expectations and looming intervention risks that could support the Japanese Yen.

Gold trades flat as stronger US Dollar offsets easing Fed rate-hike bets

Gold trades little changed on Monday after giving back most of its early gains. The metal remains caught between easing Fed interest-rate hike bets and a stronger US Dollar (USD), while US Treasury yields also remain elevated near multi-year highs.

Crypto Today: Bitcoin rally slows while Ethereum and XRP extend recovery amid slowing ETF inflows

Bitcoin is narrowly consolidating while trading above $86,000 at the time of writing on Monday. Altcoins, on the other hand, show a positive outlook, with Ethereum edging higher above $2,700 while Ripple steadies above $1.52.

Eurozone inflation just hit 3.8%, its highest in three years. This chart shows why the ECB can’t simply hike its way out

The ECB would normally have a relatively straightforward answer to inflation running almost twice its target: raise interest rates. But these are not normal circumstances. This time, the bond market is already doing part of the tightening for it, leaving the ECB facing an increasingly difficult dilemma.