GBP price, news and analysis:
- GBP/USD dropped through trendline support Tuesday and now faces a further fall to the 200-day moving average at 1.2655. If that fails to hold, more weakness can be expected.
- The UK announced new restrictions on pub and restaurant opening times Tuesday after a surge in Covid-19 cases this month and warned that the measures could last for six months.
- Meanwhile the FTSE 100 is benefiting from the weakness of GBP.
GBP/USD heading lower still
GBP/USD continues to weaken on concerns about a lackluster economic recovery globally, spurring further risk aversion in the markets and lifting the safe-haven USD to a two-month highs as measured by the USD index.
GBP/USD Price Chart, Daily Timeframe (July 17 – September 23, 2020)
Chart by IG (You can click on it for a larger image)
The support level that broke Tuesday was a trendline connecting the recent daily lows. Now, a drop to the 200-day moving average at 1.2655 is plausible and, if that breaks, there is little further support ahead of the mid-July lows.
| Change in | Longs | Shorts | OI |
| Daily | 1% | -8% | -5% |
| Weekly | -18% | 20% | 2% |
Sterling traders have taken badly news of fresh curbs to avoid a second wave of Covid-19 infections in the UK, and the consequent weakness in GBP/USD has helped lift the FTSE 100 index of the largest London-listed stocks – many of which have overseas earnings and therefore benefit from a weaker Pound when those earnings are repatriated to the UK.
FTSE 100 Price Chart, Daily Timeframe (July 17 – September 23, 2020)
Chart by IG (You can click on it for a larger image)
| Change in | Longs | Shorts | OI |
| Daily | -4% | 0% | -2% |
| Weekly | -32% | 48% | -4% |
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--- Written by Martin Essex, Analyst
Feel free to contact me on Twitter @MartinSEssex
