Last week, a bullish momentum pushed GBP/USD to a multi-week high. Will the upward trend survive this week, or will the EU-UK updates reverse the price direction?
Cable Technical Overview
- Critical days for EU-UK free trade deal
- Positive outlook while above 1.3185
Deal or No Deal?
The UK and the EU have entered another intense round of negotiations in Brussels however, time is running up. Nonetheless, the top PM advisor Dominic Cumming’s resignation last week could be a game-changer as he was known for favoring a Brexit without a deal. Both sides' economies are exhausted from lockdowns and coronavirus rising numbers therefore a no-deal scenario is still a possibility but remains unlikely.
GBP/USD Daily Price Chart (September 29 – November 16, 2020)Chart source, Webtrader, Capex.com
On November 11, GBP/USD hit an over two-month high at 1.3312 then retreated as bulls seemed to cutback. On Friday, the price rallied to the current trading zone 1.3185 – 1.3460 indicating that the bullish momentum was still intact.
A daily close below the low end of the zone at 1.3185 signals a weaker bullish sentiment. As such, bears may press towards the weekly support level at 1.2916.
On the flip side, a daily close above the low end of the zone at 1.3185 keeps the door open to a further rally towards the high end of the zone 1.3460.
GBP/USD Four Hour Price Chart (November 3 – November 16, 2020)Chart source, Webtrader, Capex.com
On Friday, GBP/USD rebounded from the bullish trend line originated from November 4 at 1.2913 indicating that bulls were still in charge.
To conclude, while the bullish bias is still in place, a break above 1.3312 may cause a rally towards 1.3433, on the other hand, a break below the aforementioned bullish trend line may correct the price lower and a break below 1.3159 could send the price towards 1.3058. As such, the support and resistance levels underscored on the chart should be monitored closely.
The research provided does not constitute the views of JME Financial Services (Pty)Ltd nor is it an invitation to invest with JME Financial Services (Pty)Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.
As of the date the report is published, the research analyst and his/her spouse and/or relatives who are financially dependent on the research analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities).
The research analyst in not employed by JME Financial Services (Pty)Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation or particular financial needs before making a commitment to invest. The laws of the Republic of South Africa shall govern any claim relating to or arising from the contents of the information/ research provided.
JME Financial Services (Pty) Ltd trading as ZA.CAPEX.COM acts as intermediary between the investor and Magnasale Trading Ltd, the counterparty to the contract for difference purchased by the Investor via ZA.CAPEX.COM, authorised & regulated by the Cyprus Securities and Exchange Commission with license number 264/15. Magnasale Trading Ltd is the principal to the CFD purchased by investors