GBP price, news and analysis:
- Wednesday’s mini budget presented by UK Chancellor of the Exchequer Rishi Sunak has strengthened GBP/USD and its rise now looks set to continue.
- However, the pair is looking overbought near-term so there could now be a period of consolidation before the climb resumes.
GBP/USD outlook positive after summer statement
UK Chancellor of the Exchequer Rishi Sunak’s mini budget, presented Wednesday, has given GBP/USD a renewed lift and the pair could well advance further, although perhaps only after a near-term period of consolidation.
The package of measures announced by Sunak in his summer statement totaled £30 billion and was designed to boost the British economy after the slump caused by the lockdown measures imposed to counter the economic impact of the coronavirus pandemic.
That’s a relatively small sum compared with the £500 billion cost of the UK bank bailout in 2008, the cost of the HS2 high-speed rail project – calculated at around £75 billion – and the estimated £205 billion cost of replacing Trident, the UK’s nuclear program. The new measures will also have to be paid for in due course but, for now, the package will likely continue to support GBP.
GBP/USD Price Chart, One-Hour Timeframe (June 29 – July 9, 2020)
Chart by IG (You can click on it for a larger image)
GBP is also looking positive against currencies like the Euro, with EUR/GBP likely to continue to trend lower. GBP/AUD, GBP/NZD and GBP/CAD are looking perkier too after the long slide that began in early April. Note, though, that GBP/USD is looking overbought near-term, with the relative strength index (RSI) close to 70 on the hourly chart above.
Looking further ahead, there are tentative signs of progress in the UK-EU talks on their post-Brexit relationship, and that too has the potential to strengthen Sterling.
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| Change in | Longs | Shorts | OI |
| Daily | -3% | 7% | 3% |
| Weekly | -15% | 34% | 10% |
--- Written by Martin Essex, Analyst and Editor
Feel free to contact me on Twitter @MartinSEssex
