Bottom line: GBPUSD medium term structure continues to remain bullish against 1.1414 lows. Bulls are carving a potential higher low around 1.2450/60 before resuming higher towards 1.2900/1.3200.
Fundamental Outlook:
EURUSD had touched 1.1400 mark last week before reversing as the US Dollar gained against majors. As the COVID-19 fears returns, risk aversion continues over the last few sessions. SPX500 has lost over 7%, while the Dow Jones close to 8% since June 09, 2020. This has aided the Safe Haven US Dollar, as it emerges strong against most majors.
GBPUSD is expected to remain volatile ahead of the meeting between UK’s Prime Minister Boris Johnson and European Commission President Ursula Von der Leyen, over Brexit today. The GBPUSD exchange rate has dropped to 1.2500 mark after last weeks’ high above 1.2800.
FTSE remain no different as DAX, Dow Jones and SPX500 continue their slide from last week. FTSE is down over 8% since June 09 high at 6513, as we write this article. The indice faces further volatility over Brexit negotiations, in addition to risk aversion.
Technical Analysis:
GBPUSD might be correcting lower, after hitting above 1.2800 mark last week. The currency might be close to finding support around 1.2450/1.2500 levels and turn higher again. Bulls might remain poised to push through 1.2900/1.3200 resistance in the near term.
GBPUSD has been carving higher highs and higher lows since 1.1414 lows. The fibonacci 0.618 extension of the recent rally is pointing towards 1.2950 at least. Also note that 1.3200 remains a major past resistance, which needs to be cleared to confirm a trend reversal.
Traders might be preparing to initiate fresh long positions around current price action (1.2500), with protective stop below 1.2200 and projected targets above 1.2900 respectively.
Prepared by
Harsh Japee, Technical Analyst.
GBPUSD Chart
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