GBPUSD: Pound to Dollar Maps a Path to 1.3080 – Chart
The pound to dollar (GBPUSD) pair is little changed today after it experienced some volatility yesterday. The pair is trading at 1.3025, which is significantly higher than yesterday’s low of 1.2861 but lower than the high of 1.3062.
Brexit was the major catalyst for the pound to dollar price yesterday. Media reports, citing government sources, said that the UK and EU would disregard the unofficial deadline for talks that was scheduled for today. Instead, the two sides will continue talking since David Frost, the Chief UK negotiator believes that a deal is possible in the coming weeks.
Indeed, analysts now believe that the next date to watch will be November 15, during the next EU summit. Still, judging by the recent strength of the sterling, analysts and traders are convinced that the two sides will reach a deal. That is because the main issues between the two sides have been narrowed to just three: fishing, level playing field, and government subsidies.
The pound to dollar price is also reacting to the rising number of Covid-19 cases in Europe and the US. In the UK, the government confirmed close to 20k cases while the US reported more than 50k cases. The same trend is happening in other European countries. So, analysts believe that the situation will get worse as the winter season approaches. Similarly, the GBPUSD price is reacting to the ongoing earning season in the United States. Analysts at UOB Bank wrote the following about the GBP/USD.
“The rapid rise appears to be running ahead of itself but there is scope for GBP to test the 1.3080 resistance first before a more sustained pull-back can be expected. For today, a move beyond 1.3120 is unlikely. Support is at 1.2970, the stronger level is at 1.2940.”
Pound to dollar technical outlook
The hourly chart shows that the pound to dollar price bounced back yesterday, after falling to a low of 1.2861. The price is now above the middle line of the Donchian channels. In addition, it has formed a bullish pennant pattern that is shown in green.
Therefore, for today, as the EU summit starts, I suspect that the pair will continue rising as bulls aim for the 1.3080, which is 0.50% higher than the current level. On the flip side, a move below the psychological level of 1.3000 will invalidate this trend.