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GBP : Test The Limits

(Fri, 15 May 2020).

COVID-19 RESEARCH MAY HELP UNLOCK THE UK ECONOMY
An article in today’s Daily Telegraph suggests that the spread of COVID-19 in London has fallen sharply with the current R rate at just 0.4. Using data calculated by Public Health England and Cambridge University, the report shows the daily infection figure in London is down to just under 24 people, a figure that may push UK PM Boris Johnson to speed up the re-opening of the capital. The Daily Telegraph article points out that at the peak of infection, 213,000 people a day caught the virus in London. It remains to be seen if the current R rate picks-up in London as lockdown measures are slowly rolled-back.

EU trade negotiator Michel Barnier will speak at 13:00 CET (12:00 UK) and give an update on the latest round of EU/UK trade talks. It seems likely that no real progress has been made this week with various news reports suggesting that talks are struggling. The EU say that the UK is running down the clock ahead of the June 31 extension deadline, while the UK believes that the EU demands are excessive compared to trade agreements reached with other countries.

Against this backdrop of heightened Brexit tensions, the British Pound continues its move lower. Both GBP/USD and EUR/GBP have been range bound for the last 4-6 weeks and cable’s support is now under pressure while EUR/GBP resistance is being probed.

GBPUSD hit the April low at 1.2166 yesterday before moving marginally higher and the pair currently trade around 1.2200. A series of daily lower highs suggest another test of the early-April low although the CCI indicator shows the market at oversold levels last seen mid-to-late March when cable trade around 1.1500.

Another major Sterling pair, EUR/GBP is also testing its recent trading range, making a six-week high on Wednesday before drifting back. EUR/GBP has been in a near two-point trading range since the beginning of April and the technical set-up suggests the pair may make another attempt at breaking through resistance. The CCI indicator again warrants consideration with the pair in extreme overbought territory.

 

 

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