- GBP / USD bounces from 1.2855 and consolidates above 1.3000.
- Hopes for a Democratic victory send the US dollar plummeting.
- The market is overlooking Brexit and COVID-19 fears.
The bearish reaction of the pound sterling from session highs at 1.3080 it has been contained at 1.3010 and the pair is up nearly 1%, driven by positive market sentiment.
The USD falls in hopes of a Democratic victory
The British pound has extended Monday’s rebound from the low of 1.2855 to levels above 1.3000, helped by a broad appetite for risk. Investors appear to be valuing a Biden victory that would pave the way for a major fiscal stimulus package and undermine demand for the US dollar in the medium term.
With all eyes on the US elections, investors are overlooking the lack of news on Brexit negotiations, as well as the one-month closure announced by UK Prime Minister Boris Johnson over the weekend. , in a bid to stem the rise of coronavirus infections in the UK.
GBP / USD could still retest 1.2850 – UOB
On the technical front, the UOB currency analysis team expects the pound to remain under slight downward pressure in the short term and not rule out a pullback to the 1.2845 zone: “The British pound is considered to be under a Slight bearish pressure and could gravitate towards the main support at 1.2845. ‘Subsequently, the British pound plummeted to 1.2854, but the decline was brief. As of here, there is no change in our view and we still see a possibility that the GBP test the 1.2845 level. Only a break of 1.3030 (unchanged from the “strong resistance” level) would indicate that the current slight downward pressure has eased. Looking ahead, the next support below 1.2845 is at 1.2800
Credits: Forex Street
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