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British Pound (GBP) Latest: GBP/USD Under Pressure Ahead of Next Week's EU/UK Trade Talks

British Pound (GBP) Latest: GBP/USD Under Pressure Ahead of Next Week's EU/UK Trade Talks

2020-05-29 09:30:00
Nick Cawley, Strategist
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British Pound (GBP) - EU/UK Trade Talks and GBP/USD Forecast, Chart and Analysis:

  • EU/UK remain at loggerheads as trade talks stagnate.
  • Sterling likely to remain weak in the short-term.
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GBP/USD Looking for Political Guidance

The EU and UK trade negotiating teams will meet for a final round of talks next week with little movement expected from either side. There remains a lack of progress on the three main areas of contention – fisheries, a level playing field and the future role of the European Court of Justice - and with both sides adamant that the other should change their stance, this game of ‘you first’ may eventually see the UK leaving the EU with no trade agreement, a situation that neither party wants. It is expected that UK PM Boris Johnson will join next week talks in an effort to break the current stalemate, but with both sides digging their heels in, expectations for progress are low. While this remains the case, Sterling will find it increasingly difficult to push higher and any short-term gains will likely be capped.

The daily GBP/USD chart shows the pair trading in a tight range this week with the 50-day moving average curbing any move higher. A short-term series of higher lows remain in place, aided in part by month-end rebalancing which is expected to favor Sterling against the US dollar, but with the 50% fib retracement at 1.2306 also in play, further downside is looking increasingly likely next week. A cluster of recent lows around the 1.2160 level and the Tuesday’s low print at 1.2190 may act as the first level of support for the pair. A break and close above 1.2362 is needed to turn sentiment positive. Above here the 61.8% fib retracement at 1.2517 comes into play ahead of the recent double-top at 1.2648.

GBP/USD Daily Price Chart (November 2019 – May 29, 2020)

Chart showing GBP/USD price
GBP/USD BULLISH
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Change in Longs Shorts OI
Daily 3% 5% 4%
Weekly -16% 9% -3%
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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) – 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.

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