GBP / USD Price, Chart and Analysis:
- EU / UK trade negotiations have given hope.
- Localized lockdowns close to COVID-19 continue to spread.
- UK retail sales boosted by online sales.
For all economic data and events, consult the DailyFX Calendar.
The pound took a higher net leg on Thursday after comments by the President of the European Commission, Ursula vsure reuh Leyen hit the wires, saying she was “convinced” that a trade deal between the EU and the UK was still possible. Von der Leyen added that the UK’s Internal Market Bill was a distraction and suggested that trade negotiations should continue while political issues are discussed. The British pound surged after the release, hitting 1.3100 against the US dollar and the pair still retains most of yesterday’s gains early in trade today.
The government is considering further localized lockdowns as COVID-19 continues to spread, according to new media. The UK registered 3,395 new cases yesterday, the sixth day in a row the numbers have been over 3,000, and fears are growing that the number of hospitalizations will soon rise sharply. Health Minister Matt Hancock said a new national lockdown remained the last line of defense, adding that new local lockdowns should help prevent that from happening.
UK retail sales data for August released earlier today shows continued recovery but a slowing pace. Annual retail sales rose 2.8%, slightly below market expectations, but doubled the number seen in July, while non-fuel retail sales rose 4.3% from 3.1% on last month. Growth was driven by online food and clothing sales, while street and fuel sales continued to suffer.
GBP / USD is trading around 1.2885 and continues to hold the majority of Thursday’s gains. This week’s highs between 1.3002 and 1.3036 could provide an initial zone of resistance, while the 50-dma and 20-dma at 1.3074 and 1.3102 respectively should hold for the near term. Support around 1.2860 -1.2875.
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GBP / USD Daily Price Chart (January – September 18, 2020)
of customers are net long.
of customers are net short.
IG customer sentiment data shows that 44.81% of traders are net long with a short / long ratio of 1.23 to 1. The number of net-long traders is 3.95% lower than yesterday and 12.07% lower than last week, while the number of net-short traders is 3.17% lower than last week. ‘yesterday and 21.59% more than last week.We generally take a vexing view of crowd sentiment, and the fact that traders are net-short suggests that GBP / USD prices may continue to rise.
Traders are even shorter than yesterday and last week, and the combination of current sentiment and recent changes gives us a GBP / USD bullish contrarian trading bias.
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