GBP : Will be Driven By Greenback
(Mon, 24 Aug 2020). EU/UK trade talks remain at an impasse. GBP-USD will be driven by the greenback this week.
A CAUTIOUS START TO THE WEEK
The seventh round of EU/UK trade talks broke up with little agreed and with both sides sounding pessimistic that a deal can be reached before the UK leaves the EU at the end of the year. The EU said that they were disappointed with the latest round of talks while the UK said that little progress had been made. It is likely that a breakthrough will be made, even if it is just a bare-bones trade deal that can be fleshed out later, as neither will benefit from fresh trade tariffs and WTO trade terms. Talks will continue in the background before the next meeting between the two parties on September 7.
There is little on the UK docket this week to steer Sterling and GBP-USD traders should look to the US for fresh trading signals. There are a few important economic releases this week, including consumer confidence and durable goods – while Fed chair Jerome Powell will speak online at this year’s Jackson Hole Economic Symposium titled ‘Navigating the Decade Ahead: Implications for Monetary Policy’. The virtual meeting on August 27-28, will give traders a clearer picture of how the Fed, and other global central bankers, see the future of the US economy.
GBP/USD is trying to claw back a part of last Friday’s sell-off and trades either side of 1.3100. The recent short-term bullish pennant formation is under threat after a positive breakout early last week and support for the pair is starting to look under threat after a bearish engulfing candle was formed on Friday. Recent lows, all the way down to 1.3000, should stem any sharp sell-off, but the broken pennant and GBP/USD below the 20-dma casts a negative shadow over the pair for now.
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