GBP / USD cuts early gains and retreats below 1.2950

  • GBP / USD rally attempt has been capped at 1.2975.
  • The pound remains flat on the day with all eyes on Brexit developments.
  • GBP / USD seen in defensive mode below 1.3050 – UOB.

The rebound of the British pound from the 1.2910 zone has been capped below the session highs at 1.2980, and the pair fell back towards 1.2900. The pound is virtually unchanged on the day, and markets are expecting a breakthrough in the Brexit negotiations between the UK and the EU.

Brexit remains the main driver of the GBP

The pound appreciated earlier today as market sentiment improved and the European Commission issued a statement showing its willingness to intensify trade talks with the UK. This boosted market sentiment on a last minute deal that sent the pound back to the 1.2975 zone.

Investors, however, are extremely cautious about long GBP positions with Brexit negotiations stalled. UK Prime Minister Boris Johnson said this weekend that there is no point in resuming talks unless Brussels adopts a “fundamental change of approach” and called for preparing for an Australian-style no-deal exit from the Union, It has dashed hopes for a trade deal.

GBP / USD is likely to remain in defensive mode below 1.3050 – UOB

On the technical side, the UOB currency analysis team expects the pair to continue trading between 1.2845 and 1.3050 for the next several weeks: “Last Friday (16 Oct at 1.2905), we held the view that the GBP is likely to trade in a slightly defensive mode with 1.3050 acting as a strong resistance. ”The GBP rose to a high of 1.3024 yesterday (Oct 19) and although the downward pressure has eased, only a break of 1.3050 would indicate that the GBP is not ready. to test the main support at 1.2845. In other words, there is no change in our opinion for now. That being said, to rejuvenate the current momentum, the GBP has to move and stay below 1.2900 within this 1 or 2 days or the odds of a 1.2845 test would decrease rapidly. ”

Credits: Forex Street

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