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06 Oct 2020
2 min read

GBP/USD Analysis: Eases Off Highs. Trades Below 1.3000

GBP/USD GBP/USD Analysis: Eases Off Highs. Trades Below 1.3000

*OspreyFX would like to state that traders should research extensively before following any information given hereby. Any assumptions made in this article are provided solely for entertainment purposes and not for traders to guide or alter their positions. Please read our Terms & Conditions for more information.

Key Takeaways:

  • The Sterling dips below the 1.30
  • Brexit is the influencing factor for the Pound
  • Negotiations continue between the UK and the EU

The Sterling dipped below the 1.30 mark right after a quick break above the psychological level to a high of 1.3007. Furthermore, The price is currently in the range of 1.2920-1.2950 as it proves hard to continue going North. The UK PM Boris Johnson is taking measures to overcome the pandemic and keep the economy afloat. However, the mood has turned from positive to negative on uncertainty related to Brexit talks.

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Brexit Leads to Sterling Dips

The path towards the recovery of the pair since its latest low of 1.2675 on Sep 23 has reached a double top today. Indeed, it’s coinciding with the previous high of 1.3007 reached on Sep 16. In addition, the 200 SMA on the 4HR chart falls right on top of today’s high, solidifying the double top. It is important to watch the close of today’s candle as it can be significant in the short-term outlook.

PM Johnson is ready to continue the extended Brexit negotiations. In a phone call between Boris Johnson and European Commission President Ursula von der Leyen, both agreed to join efforts. Aiming to find the most appropriate, and fair solutions to the Brexit hurdles.

Brexit is the most significant factor driving the direction of the Pound. It’s clear now that Boris Johnson places his focus on providing power to every home in the UK with offshore wind energy before 2030. This became evident today when the PM gave a speech to the virtual Conservative Party conference. Through this statement, we can extract that the government is preparing to invest in a clean energy future.

Brexit Negotiations: The Road Ahead

On the EU side, a report was released today, saying that an EU negotiating team is heading to London tomorrow with chief Brexit negotiator, Michel Barnier, to join on Friday. The goal of the visit is to resolve some gaps in the process of the UK leaving the EU and possibly speed up the situation to bring more certainty and clarity. The results from this event could spark some unexpected moves in the Sterling due to increased volatility.

On top of that, the depreciation in the pair could also be a product of the statement made earlier by Maroš Šefčovič. The Slovak politician and Vice President of the European Commission for Interinstitutional Relations said that “full, timely implementation of Brexit withdrawal agreement is not debatable”. It remains to be seen how the events will play out in the coming days as we also have a scheduled European Council meeting on 15-16 October.

 

*OspreyFX would like to state that traders should research extensively before following any information given hereby. Any assumptions made in this article are provided solely for entertainment purposes and not for traders to guide or alter their positions. Please read our Terms & Conditions for more information.