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Sterling Update: GBP/USD, EUR/GBP, GBP/JPY React to Brexit and COVID Latest

Sterling Update: GBP/USD, EUR/GBP, GBP/JPY React to Brexit and COVID Latest

Justin McQueen, Analyst

GBP/USD Price Analysis & News

  • GBP/USD Latest: Breaking Down from Elevated Levels
  • EUR/GBP Latest: Back to Dec Highs
  • GBP/JPY Latest: 140 Yet Again Rejected
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GBP Update: Losses Extend as Markets Digest Latest Brexit and COVID Concerns

GBP losses have extended further throughout the morning as European participants digest the newsflow from the weekend. Brexit negotiations are continuing this week, however, as the Irish Foreign Minister has mentioned significant differences persist with fisheries remaining the key stumbling block. Aside from Brexit, the worsening COVID situation has not helped matters for the Pound with tier 4 measures in London and concerns over a new strain of the virus leading to supply disruptions of UK goods. That said, there is one slightly positive news, which is that plans are being made for a European-wide mechanism to allow traffic flow between the UK and France to resume, according to the French Transport Minister.

As we approach the US crossover, eyes will be focussed on whether the current risk-off moves are extended or begin to reverse.

GBP/USD Latest: Breaking Down from Elevated Levels

Sharp losses for GBP/USD with the pair currently 2.1% lower at the time of writing. A brief move below 1.3200, which also roughly coincides with the 50DMA at 1.3206 and trendline support from the YTD low. In turn, further losses have been curbed, for now, however, failure to hold brings the Dec low at 1.3134 into focus. On the topside, initial resistance resides at 1.3270-80 (last weeks lows) with a break above opening the doors to 1.3340-45. Of note, GBP/USD 1-day implied volatility is at the highest since the Q1 COVID crash, thus price action is expected to become choppy at current levels.

GBP/USD BEARISH
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 13% -25% -11%
Weekly 28% -40% -19%
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GBP/USD Chart: Daily Time Frame

Sterling Update: GBP/USD, EUR/GBP, GBP/JPY React to Brexit and COVID Latest

Source: IG Charts

EUR/GBP Latest: Back to Dec Highs

As EUR/GBP hovers around 0.9200, the cross is back to levels associated with heightened no-deal Brexit risks. Although, what is interesting to note is that bookmakers (SMARKETS) at present have the odds of a deal at a higher probability than a no-deal (55/45). That said, GBP will continue to remain extremely sensitive to Brexit related headlines, meaning that traders with exposure to GBP must remain disciplined. In terms of levels to watch, topside resistance is situated at 0.9200-20, which has capped further upside at present. In terms of initial support, there is little in the way until 0.9120 with 0.9060 below (gap close).

For a comprehensive look at trading discipline, check out the traders guide to trading psychology

EUR/GBP BULLISH
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -20% 9% -9%
Weekly -28% -1% -18%
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EUR/GBP Chart: Daily Time Frame

Sterling Update: GBP/USD, EUR/GBP, GBP/JPY React to Brexit and COVID Latest

Source: IG Charts

GBP/JPY Latest: 140 Yet Again Rejected

GBP/JPY has made a firm break below the 100 and 50DMA at 137.84 and 137.88 respectively with a test now at trendline support. In turn, bounces are likely to face its first hurdle at the 100 and 50DMA. On the downside, the Dec low sits at 136.77.

GBP/JPY BEARISH
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -5% -11% -9%
Weekly -17% -24% -22%
Learn how to use Sentiment in your trading strategy
Get My Guide

GBP/JPY Chart: Daily Time Frame

Sterling Update: GBP/USD, EUR/GBP, GBP/JPY React to Brexit and COVID Latest

Source: IG Charts

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