Daily Market Recap - GBPUSD

The GBPUSD is showing signs of resilience this week despite the lingering concerns of a no-deal Brexit in the headlines. The pair is building on a three-day consecutive rise but remains limited by the 1.30 mark which appears to be putting up strong resistance at the time of writing.

The UK is rumored to have offered a tentative compromise proposal regarding fishing rights with the EU which appears to be helping to lift the GBPUSD further this afternoon. The issue of fisheries has been a strong point of contention in the trade deal negotiations in the previous months.

Meanwhile, economic data released today came in mixed for the UK through the headline CPI year over year figure for march beat expectations at an increase of 0.2 percent. Elsewhere the retail price index and the producer price index output both failed to meet their targets, landing at 0.5 percent and -0.9 percent respectively.

Tomorrow will be a big day for the Bank of England as it will deliver its monetary policy announcement. Analysts are expecting the central bank to hold interest rates steady, but speculation is mounting over a potential additional stimulus package before the year-end.

From a technical perspective, the GBPUSDs next significant test will be at the 1.30 mark which has proven difficult to cross on several occasions today. The main trend remains down for the pair, but short-term momentum is in favor of the bulls. A failure to close above the 1.30 resistance level will condemn the pair to further sideways trading with a neutral outlook.

(Chart Source: Tradingview 16.09.2020)

Volatility is expected to pick up tomorrow with the combined BoE and US Federal Reserve policy addresses. The 1.29 mark will serve as an immediate support zone for traders eyeing price action. Should that level be taken out, the next support will be the 1.28 round figure below. Under current conditions, a reasonable move will be to short towards the 1.2830 marks with conservative lot sizes.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.