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British Pound (GBP) Latest - Hitting Resistance as Brexit Talks Continue

British Pound (GBP) Latest - Hitting Resistance as Brexit Talks Continue

Nick Cawley, Strategist

Brexit Outlook and Sterling (GBP/USD) Price, Analysis and Chart:

  • Michel Barnier will travel to the UK today.
  • Sterling starting to look fully-priced.
  • IG client sentiment is bearish.
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Trade talks between the EU and UK continue today after EU chief negotiator Michel Barnier has briefed the EU Parliament and the Member States this morning. After much confusion about whether he would make the journey or not, Mr. Barnier will travel to the UK later Friday to meet his UK counterpart David Frost in yet another attempt to break the current gridlock. Mr. Barnier will also be speaking to the EU fishing ministers today to give them the latest, regular, update on the talks. Major differences between the two sides remain over fisheries, a level playing and state aid. This weekend’s talks are seen by some in the market as make-or-break as the clock ticks down.

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Sterling has been moving gradually higher against a weak US dollar over the last two months and has now run into topside resistance around the 1.3400 level. While the technical set-up remains positive with all three moving averages providing strong support, the market has crept into overbought territory, using CCI, and may need a fundamental driver for the next move. A positive outcome from the EU/UK talks should see cable take out the mid-December 2019 high of 1.3515 and move back towards the 1.3800 area, while a no-deal outcome may see the pair test the 1.2650-1.2850 zone.

GBP/USD Daily Price Chart (February – November 27, 2020

)

British Pound (GBP) Latest - Hitting Resistance as Brexit Talks Continue
GBP/USD MIXED
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 9% 3% 5%
Weekly -4% 15% 6%
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IG client sentiment data show 35.72% of traders are net-long with the ratio of traders short to long at 1.80 to 1.Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBP/USD price trend may soon reverse lower despite the fact traders remain net-short.

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What is your view on Sterling – 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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