GBPUSD is 0.5% lower on the day as traders absorb the rise in virus cases in the U.K. and the ongoing Brexit stalemate. The dollar is seeing safe haven flows as virus cases rise across Europe and threaten the fragile global recovery.
Although cases are rising in the U.S., the U.K. is seeing a greater threat as a percentage of its population and the country is stuck in confusing lockdown rules. Yesterday saw a rise of 75,000 cases in the U.S. and 22,000 in the U.K., while deaths reported were around 1,000 and 367 respectively. The U.S. is not seeing the same push for lockdowns as in the U.K. where the country is being split into tiers and altering the status of regions on an almost daily basis.
Brexit talks are still ongoing but officials are talking about this being the “most difficult part” part of the talks. EU Council President Charles Michel reported yesterday that he was still not certain if a deal would happen. Michel told reporters:
“Will we get a deal? I don’t know – it will depend on what will be on the table”.
It will be slightly concerning for traders that they are unsure what is on the table 3.5 years after the referendum. The Brexit issue will likely hang over the pound into November and the virus issue is another concern that could support the dollar. The U.S. election next week has the potential for volatility in the greenback and we should assume that the dollar’s struggles this year were somewhat related to the election polls.
GBPUSD Technical Outlook
The GBPUSD is setting up a bearish close on the day that could begin another move lower. The support below is below 1.2900 and the 1.2700 level is the ultimate target. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.