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British Pound (GBP) Outlook - GBPUSD Struggles Despite Ongoing US Dollar Weakness

British Pound (GBP) Outlook - GBPUSD Struggles Despite Ongoing US Dollar Weakness

Nick Cawley, Strategist

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

  • GBPUSD stuck around 1.3325 as Brexit talks continue.
  • Brexit talks enter a crucial week.
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The US dollar continues to slide and is now at its lowest level since April 2018 as investors continue to move out of the greenback and into riskier currencies on coronavirus vaccine hopes. In addition, markets continue to price in additional stimulus measures when the Fed meets on December 15/16, weakening the US dollar further.

Over the weekend there was media talk that the UK is set to approve a Covid-19 vaccine – possibly Pfizer – which would set the stage for an inoculation program to start in the very near future. While this would normally be seen as a GBP-positive, Sterling remains in the thrall of ongoing Brexit talks and will not make a move either way until there is more clarity about future EU/UK trade. Earlier, UK Environment Secretary George Eustice said that talks could be extended if a deal was possible, while other media sources have suggested that EU Commission President Ursula von der Leyen has sent her senior official Stephanie Riso to help chief negotiator Michel Barnier unblock talks and find a deal.

Sterling (GBP) Weekly Outlook – Friction When Technicals and Fundamentals Collide

GBP/USD has seemingly found a short-term top around the 1.3400 level and is unlikely to break above there until there is some positive EU/UK trade news. The three moving averages provide support, starting around 1.3265, and GBPUSD is likely to remain range-bound in the near future.

GBP/USD Daily Price Chart (February – November 30, 2020)

British Pound (GBP) Outlook - GBPUSD Struggles Despite Ongoing US Dollar Weakness

IG client sentiment data show 37.34% of traders are net-long with the ratio of traders short to long at 1.68 to 1. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed GBP/USD trading bias.

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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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