GBP/USD has been struggling amid rising coronavirus cases. Brexit hopes have been holding the cable up, but other concerns are piling. Meanwhile, Tuesday's 4-hour chart is showing that the currency pair is battling uptrend support, FXStreet’s Analyst Yohay Elam reports.
Key quotes
“COVID-19 cases continue rising in the UK and have remained elevated also on Monday – a day that usually sees a drop due to administrative delays over the weekend. The pandemic is gripping the northern hemisphere and weighing on the global economy. Sterling is struggling with Britain's local lockdowns, while the dollar is benefiting from safe-haven flows.”
“While several post-presidential debate polls have shown a steady lead for Joe Biden, critical high-quality surveys from battleground states are still awaited. Moreover, the Senate race remains closer. FiveThirtyEight's model is pointing to only a 12% chance that President Donald Trump is reelected, while Republicans have roughly a 30% probability of holding onto the Senate. Markets currently prefer a large win for Democrats that would ensure a generous stimulus package and despite potentially market-unfriendly policies. Congress is now adjourned, meaning a relief deal is all but dead.”
“Chief EU Negotiator Michel Barnier extended his stay in London for ongoing talks. However, as time passes by, the silence around the deliberations stops helping the currency and begins weighing on it. PM Johnson denied that he is waiting for the US elections to strike a deal with the EU. Resolving the issues of state aid and fisheries is more critical than a question of timing – at least that is the current notion in financial markets.”
“Pound/dollar is trading above the uptrend support line that has been accompanying it since mid-October. The line is backed up by the 50 and 100 Simple Moving Averages. The uptrend support line comes out at around 1.3015 at the time of writing. It is followed by 1.2990, a low point on Monday. Resistance is at 1.3075, a high point on Monday, and then by 1.3125 and 1.3175.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats below 1.0700 as USD rebounds
EUR/USD lost its traction and retreated slightly below 1.0700 in the American session, erasing its daily gains in the process. Following a bearish opening, the US Dollar holds its ground and limits the pair's upside ahead of the Fed policy meeting later this week.
USD/JPY recovers toward 157.00 following suspected intervention
USD/JPY recovers ground and trades above 156.50 after sliding to 154.50 on what seemed like a Japanese FX intervention. Later this week, the Federal Reserve's policy decisions and US employment data could trigger the next big action.
Gold holds steady above $2,330 to start the week
Gold fluctuates in a relatively tight channel above $2,330 on Monday. The benchmark 10-year US Treasury bond yield corrects lower and helps XAU/USD limit its losses ahead of this week's key Fed policy meeting.
Week Ahead: Bitcoin could surprise investors this week Premium
Two main macroeconomic events this week could attempt to sway the crypto markets. Bitcoin (BTC), which showed strength last week, has slipped into a short-term consolidation.
Five Fundamentals for the week: Fed fears, Nonfarm Payrolls, Middle East promise an explosive week Premium
Higher inflation is set to push Fed Chair Powell and his colleagues to a hawkish decision. Nonfarm Payrolls are set to rock markets, but the ISM Services PMI released immediately afterward could steal the show.