GBP/USD Daily Forecast – British Pound Remains Sensitive To Brexit News
GBP/USD Video 20.10.20.
British Pound Is Flat Against U.S. Dollar After Yesterday’s Volatile Trading Session
GBP/USD failed to settle above the resistance at 1.3000 and returned to the 50 EMA level at 1.2945 as traders reacted to news on Brexit negotiations.
GBP/USD got a boost after British minister Michael Gove stated that European Union’s Michel Barnier agreed to intensify negotiations. Later, Britain’s negotiator David Frost signaled that the country would not continue talks until EU offers consessions. This statement put material pressure on GBP/USD and pushed it back below 1.3000.
Most likely, GBP/USD will remain highly sensitive to Brexit news in the upcoming trading sessions.
In addition to Brexit talks, GBP/USD traders will focus on UK inflation data which will be published on Wednesday. Inflation Rate is expected to increase by 0.5% year-over-year in September while Core Inflation Rate is projected to grow by 1.3%.
Currently, Britain is fighting against the second wave of coronavirus, and it is interesting to see whether problems on the virus front put pressure on prices. Previously, Bank of England stated that it did not rule out an adoption of negative interest rate policy.
Just like other major central banks, Bank of England is trying to bring inflation to the 2% mark. If the inflation reports are weaker than expected, the odds of negative rates will increase.
GBP/USD continues its attempts to settle above the 50 EMA at 1.2945. In case GBP/USD manages to stay above the 50 EMA, it will have a chance to develop additional upside momentum and get to the test of the highs of the previous trading session near 1.3030.
I’d note that GBP/USD has mostly ignored the resistance at 1.3000 in recent sessions but there’s a chance that it may still face some resistance at this level on the way up.
In case GBP/USD moves above the resistance at 1.3030, it will head towards October highs near 1.3070.
On the support side, the nearest support level for GBP/USD is located at 1.2890. If GBP/USD gets below this level, it will gain downside momentum and decline towards the next support at 1.2815.
For a look at all of today’s economic events, check out our economic calendar.