The British currency retains the status of one of the most volatile assets of the foreign exchange market. After falling 100 points and testing support at 1.29 on Wednesday, the pair is recovering on Thursday trading, showing a technical correction. Despite local growth, market participants believe that GBPUSD sales may resume at any moment. The pound remains under pressure from the prospect of monetary easing. In particular, the Bank of England may decide to lower the interest rate already at one of the next meetings. The purpose of the additional monetary stimulus should be to support the growth rate of the national economy amid a threat from a rapidly spreading coronavirus infection, as well as uncertainty regarding trade negotiations between the UK and the EU. In accordance with the 46-page mandate for trade negotiations with the UK, EU representatives decided to adhere to strict standards regarding trade rules, thereby trying to limit the independence of England. In addition, the EU has already denied British Prime Minister Boris Johnson a bargain like the one concluded with Canada. Investors believe that obviously difficult negotiations, which officially begin this Monday, run the risk of delaying and going beyond the current transition period, which ends December 31, 2020. In addition to pessimism regarding Brexit, fears of the spread of coronavirus in EU countries also put pressure on the pound. With that said, the GBPUSD pair may well be consolidating below 1.29.
GBPUSD SellStop 1.2910 TP 1.28 SL 1.2940
Artem Deev, Head of Analytical Department, AMarkets
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