GBP/USD – COMMENT-Sterling Bulls Reverse Early UK-Data-Related Lows; Wary Of EU Summit
GBP/USD continues to show limited movement. What is the outlook for the pair in the coming days?
Here is their view, courtesy of eFXdata:
Sterling bulls are showing their resolve.
The pair, rising off its NorAm open low at 1.2531, is clawing its way back near flat by 1.2587.
Indeed, sterling had dipped below 30-DMA support at 1.2532 to a 1.2520 session low in early European trade after weak UK employment data weighed on the pound, and GBP/USD traders cast a glance at further negative economic momentum in the event of a no-deal Brexit event.
Stalled EU-UK trade talks, with barbs from both sides of the negotiating table, have added to sterling’s inability to trade to new highs above 1.2670.
Adding to its woes is GBP weakness versus the euro, as the market anticipates a generous aid and stimulus package out of the upcoming EU summit.
EUR/GBP has been rallying, rising from Jul 10’s 0.8938 low to Tuesday’s 0.9113 high.
This weekend’s EU summit will be make-or-break for EUR and GBP bulls.
A disappointing lean on the EU budget and COVID-19 aid is likely to unleash a torrent of EUR/GBP selling which may prod GBP/USD bears to test recent resistance near 1.2670.
However, should the EU meet, or surpass, upbeat budget and aid expectations, cross buying will push GBP/USD lower.
In that event, a test of 21-DMA support at 1.2487, and trend lows by 1.2252, would be likely.
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