GBP Price Forecast: Pound Sterling Volatile Amid Brexit Talks
POUND STERLING WEEKLY TECHNICAL FORECAST: NEUTRAL
- Pound Sterling has edged higher against the US Dollar and Euro as Brexit risk simmers
- GBP/USD bulls push the cable back to a big zone of technical resistance near 1.3000
- EUR/GBP price action compresses between its 20-day and 50-day moving averages
The British Pound has been choppy over the last couple of weeks with GBP price action trading violently around the latest Brexit headlines. Pound Sterling bulls have shown dexterity by defending key technical levels, but bearish headwinds have undermined episodes of strength. This has largely resulted in volatile trading ranges for GBP/USD and EUR/GBP.
GBP/USD PRICE CHART: DAILY TIME FRAME (26 MAY TO 09 OCT 2020)
GBP/USD price action has ripped higher since mid-September after finding technical support around the 1.2700-level, which is underpinned approximately by the 200-day moving average. The 300-pip jump has propelled the Pound Sterling to a critical barrier around the 1.3000-handle. This area of confluence is noted by the August lows as well as the 50-day moving average.
GBP/USD might face pushback here and recoil lower within its recent trading range, but the MACD indicator points to building bullish momentum and growing potential for a topside breakout. Reclaiming the 50-DMA and closing above the 1.3000-price level could open up the door for the Pound-Dollar to target the 1.3200-handle.
EUR/GBP PRICE CHART: DAILY TIME FRAME (16 JUN TO 09 OCT 2020)
EUR/GBP price action has behaved similarly to the cable with the Pound Sterling strengthening considerably since mid-September. This has steered the Euro-Pound roughly 200-pips lower with spot prices now hovering slightly below the 0.9100-mark, which stands out as a level of resistance-turned-support stemming from the June and July swing highs. That said, the British Pound could have difficulty advancing further against its Euro counterpart with the positively-sloped 50-day moving average capping potential EUR/GBP downside.
On the other hand, spot EUR/GBP faces downward pressure from a notable bearish trend formed by the string of lower highs over the few weeks. Eclipsing this negatively-sloped trendline could tee-up a move toward the 0.9200-handle, whereas a breach of the 50-DMA might lead to a move toward the bottom Bollinger Band and 61.8% Fibonacci retracement level of last month’s trading range before the September swing low comes into focus.
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