Bottom line: GBPUSD long term structure continues to remain bullish against 1.1414 lows in March 2020. In the short term though, bears might want to push lower towards 1.1950 levels before the rally could resume further.

 Fundamental Outlook:

EURUSD has opened the week on a positive note and is trading around 1.1460/65 as we prepare to publish. The exchange rate shall be taking cues from the EU Summit, which failed to reach an agreement last week. The EURO 750 billion stimulus package might reach to a consensus this week.

COVID-19 infections continue to be in the news around US and Asian Countries. Global cases have crossed above 14.5 million and the number of deaths above 600,000 mark. A few states in the US might be going back to lock sown phase as infections continue to rise.

GBPUSD is trading lower today around 1.2545 levels after trading in a range over the last week. The exchange rate will be taking its cues from the Brexit negotiations to be held again today. The EU and UK negotiations has been locked over the “Fisheries Control”.

FTSE had rallied over +2.75% last week and managed to close at 6333 mark. The indice is trading marginally lower around the 6300 mark as of now. The rally over the last week, was in tandem with the SPX500, Dow Jones and DAX as risk assets gained. It remains to be seen how long this continues amidst fears of a second wave of COVID-19 infections.

Technical Analysis:

GBPUSD might continue to remain in control of bears as they remain poised to push lower towards 1.1950 levels. After printing intermediary high around 1.2800 mark, GBPUSD might be looking to complete a corrective drop, before resuming its rally towards 1.4300 levels.

GBPUSD seems to have completed an impulse wave between 1.1414 and 1.2800/10 levels earlier. As discussed earlier, an impulse rally is usually followed by a corrective drop. Since 1.2800 highs, the currency might be producing a corrective drop towards 1.1950 levels.

Also note that 1.1950 is close to the fibonacci 0.618 retracement of the above rally. High probability remains for a bullish reversal if prices manage to reach there. Most traders might want to remain short for now with protective stop above 1.2800 and target 1.1950 respectively.

Prepared by

Harsh Japee, Technical Analyst.

GBPUSD Chart

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