GBP/USD Rallying After Wednesday’s Spike Lower

GBP price, Brexit news and analysis:

  • GBP/USD is back to the 1.30 level and rising gently after Wednesday’s selloff led to a brief spike below trendline support that was soon reversed.
  • Near-term, as ever, GBP/USD will likely react up or down to Brexit headlines but the main driver this session will likely be market sentiment after Wednesday’s sharp “risk off” move that hit stock markets hard.

GBP/USD steady after tumble, then recovery

GBP/USD is steadier Thursday after a brief break below support from a trendline connecting the higher highs in place since late September. That spike was soon reversed, suggesting that the trendline remains a key support for the pair, which is now trading back at the 1.30 level.

GBP/USD Price Chart, Two-Hour Timeframe (September 17 – October 29, 2020)

Chart by IG (You can click on it for a larger image)

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In the news, headlines suggesting progress, or a lack of it, in the talks between the EU and the UK on their post-Brexit relationship will doubtless shift GBP/USD one way or the other. However, the main driver short-term will likely be market sentiment after Wednesday’s steep falls in “risk on” assets such as stocks. The Covid-19 pandemic remains a key driver too, with European countries increasingly locking down to mitigate its transmission.

Robert Jenrick, the UK Housing Secretary, said Thursday that the UK Government will do everything it can to avoid a second national UK lockdown and believes it can control the virus with tough local measures.

of clients are net long.

of clients are net short.

Change in Longs Shorts OI
Daily -14% -3% -8%
Weekly 27% -33% -14%

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— Written by Martin Essex, Analyst

Feel free to contact me on Twitter @MartinSEssex

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