- GBP / USD capped below 1.3100, returns to the 1.3000 midrange.
- The pound recovered Tuesday after a three-day drop.
- GBP / USD seen between 1.2900 and 1.3120 in the short term.
The bullish reaction of the British pound seen at the beginning of the US session has lost steam just before 1.3100 and the pair has returned to the mid-range of 1.3000.
The pound cuts losses as the US dollar weakens
The pound appreciated Tuesday to regain some of the ground lost after a three-day slide from the October high of 0.3175. The pound took advantage of a weak dollar, with the USD index falling 0.25% and market sentiment improving moderately.
With all eyes on the Brexit negotiations, news of the resumption of talks and the brighter prospects for a trade deal with the EU have failed to deliver a relevant boost to GBP / USD, and only gave a moderate boost to the euro. The economic challenges looming for the UK, with COVID-19 cases rising to record levels and the Bank of England, which is expected to introduce negative rates in January, appear to be weighing on demand for the GBP.
Beyond that, the uncertainty over the US presidential election, just a week before voting day, is causing a cautious mood among investors, reflected in side markets.
GBP / USD seen between 1.2900 and 1.3120 in the short term – UOB
On the technical domain, the UOB currency analysis team expects the pair to remain capped below 1.3120 in the short term: “Yesterday (Oct 26 – 1.3050) we highlighted that the bullish momentum is starting to wane and added that the GBP it has to move and stay above 1.3120 within these 1-2 days or the odds of further GBP strength would diminish rapidly. Subsequently, the GBP came close to breaking our “strong support” level at 1.2990 (1.2993 low) and closed softly at 1.3022 (-0.13%). The bullish momentum has deteriorated further. The GBP is more likely to consolidate and trade within
Credits: Forex Street
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