- GBP / USD finds sellers at 1.3080 and falls back to the 1.3020 zone.
- The pound cuts profits as risk appetite diminishes.
- GBP / USD could still pull back to 1.2850 -–UOB.
The pound sterling it is declining late in the North American session on Tuesday, cutting previous gains after a strong rally to highs of 1.3080. The pair has lost ground, returning to 1.3020 as the USD rises.
Pound declines as risk appetite wanes
The pound has pulled back from the session highs, although it remains positive for the day, with a rally of 0.8% extending Monday’s bounce from the low of 1.2855. The risk appetite seen at the start of the European and US sessions appears to be fading, with US stock indices falling from session highs and the US dollar making up for lost ground.
With Americans heading to the polls, markets have ignored the risk aversion witnessed last week, anticipating a clear Democratic victory that would pave the way for a major fiscal stimulus package and thus weaken the dollar over the medium term.
On the other hand, the lack of news of the Brexit negotiations, that the clock is ticking towards the December 31 deadline and the introduction of a month-long lockdown to curb COVID-19 infections in the UK, appear to have been ignored by investors, helping to keep the GBP afloat.
GBP / USD could still retest half of 1.2800 – 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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