GBP/USD Stable as Brexit Deadline Nears

GBP price, Brexit news and analysis:

  • GBP/USD continues to trade just below strong resistance at the 1.30 level, with no clear sign yet of a break in either direction.
  • This sideways trading may well continue ahead of next week’s European Council meeting, when EU leaders will discuss relations with the UK after the Brexit transition period ends.

GBP/USD stability set to continue

GBP/USD continues to trade sideways just below resistance at 1.30 and is showing no sign yet of a breakout either up or down.

As the chart below shows, 1.30 is not just a psychologically important number, it is also where the price stalled in mid-September before easing back. Now the price is well supported by the 100-day moving average at 1.2785 and faces further resistance above 1.30 from the 50-dma at 1.3032 – with all recent action taking place within a channel formed by those two indicators.

GBP/USD Price Chart, Daily Timeframe (July 8 – October 7, 2020)

Source: Refinitiv (You can click on it for a larger image)

EU leaders to meet on Brexit

This sideways trading will likely continue ahead of the European Council meeting on Thursday and Friday next week, when EU leaders meet in Brussels to discuss relations with the UK after the current Brexit transition period ends on December 31.

Leaks from the current talks have been mixed, with some suggesting progress and others a lack of it. The best guess, therefore, is still that a minimal bare-bones deal will be reached by the end of next week, with further negotiations to take place until the year-end.

UK trade secretary Liz Truss said Wednesday that “a deal is absolutely do-able” but EU officials continue to be less optimistic, at least in public.

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UK housing market still buoyant

Meanwhile, data released Wednesday showed the Halifax house price index rose by a same-again 1.6% in September, raising the year/year rate to 7.3% from the previous 5.2% as the UK housing market remains buoyant.

We look at currencies regularly in the DailyFX Trading Global Markets Decoded podcasts that you can find here on Apple or wherever you go for your podcasts

— Written by Martin Essex, Analyst

Feel free to contact me on Twitter @MartinSEssex

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