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British Pound (GBP) Latest: GBP/USD Stalls Ahead of Lockdown Unwind Details and Brexit Talks

British Pound (GBP) Latest: GBP/USD Stalls Ahead of Lockdown Unwind Details and Brexit Talks

2020-05-11 08:00:00
Nick Cawley, Strategist
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British Pound (GBP) and FTSE 100 Prices and Analysis:

  • UK PM Boris Johnson will release more details on his lockdown unwind plan.
  • UK/EU trade talks to re-start but expectations remain low.
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GBP/USD and FTSE 100 – Volatility Likely to Pick-Up

UK asset markets are likely to be hit by a renewed bout of volatility this week with COVID-19, UK/EU trade talks and Q1 GDP figures all set to hit the wires. PM Boris Johnson announced Sunday a roadmap to reversing the current lockdown conditions but his speech was lacking in detail. The PM will present a 50-page blueprint for easing restrictions to MPs later today – according to The Daily Telegraph – and he will need to add clarity to Sunday’s vague statement.

The UK/EU trade talks will resume this afternoon with little in the way of progress expected. Recent commentary shows both sides hardening their stance with the EU suggesting that the UK was not engaging on a number of important points, an accusation the UK refutes. The increasingly acrimonious war of words between the two sides will weigh on Sterling, especially if no extension to the current talks is agreed by the end of June.

On Wednesday, the first look at UK Q1 GDP which is expected to show at least some of the effects of the lockdown on the economy. Preliminary q/q data is seen at -2.5%, compared to a prior 0.0%, while y/y growth is expected to fall to -2.1% from 1.1%.

For all market moving data releases see the New DailyFX Calendar.

GBP/USD tested multi-week lows last Thursday but bounced back to end the week little changed. The pair are pressing lower today and support levels at 1.2306 (50% Fibonacci Retracement), 1.2295 (50-dma) and the April 21 low print at 1.2247 may all come pressure. The short-term upside target at 1.2517 (61.8% Fib) is guarded by a cluster of recent high prints.

GBP/USD Daily Price Chart (October 2019 – May 11, 2020)

chart showing price of gbpusd
GBP/USD MIXED
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -3% -25% -13%
Weekly -7% 5% -3%
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The FTSE 100 continues to nudge higher and is making a renewed attempt to re-take the 6,000 level. Above here there is an interesting area of resistance between 6,211 and 6,239 which includes the 50% Fibonacci Retracement of the January 20-March 22 sell-off and the bottom of a gap in the chart made between March 6 and March 9. Short-term support lies between 5,840 and 5,780.

FTSE 100 Daily Price Chart (November 2019 – May 11, 2020)

chart showing the price of the FSTE 100

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on Sterling (GBP) and the FTSE 100 – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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