Brexit and GBP/USD Price, Analysis and Chart:
- EU and UK London talks are extended.
- Sterling now waiting for some details.
This weekend’s talks between the EU and UK in London have been extended Wednesday as both sides push to get a deal signed off before the end of the transition period. Talks will then move to Brussels on Thursday. The two sides are still seemingly apart on fisheries and state aid issues, despite positive sounds last week. France, according to the Daily Telegraph, is still refusing to compromise on access to the UK’s fishing grounds, and while this remains the case then progress is expected to be slow.
There is very little on the economic calendar this week to guide Sterling, while the latest coronavirus numbers show new infections around 20,000 while there have been another 151 fatalities. Patients admitted to hospital and patients in ventilator beds numbers are also rising sharply.
After touching 1.3180 last week, GBPUSD has faded back to just above 1.3000 this morning and now approaches not just big figure support but also a 20- and 50- day simple moving average crossover which needs to hold if cable is to push higher. A conclusive break lower could open the way to the recent double low around 1.2860.
GBP/USD Daily Price Chart (April – October 26, 2020)
IG client sentiment data show45.53% of traders are net-long with the ratio of traders short to long at 1.20 to 1. The number of traders net-long is 6.88% higher than yesterday and 7.66% higher from last week, while the number of traders net-short is 2.91% higher than yesterday and 5.29% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/USD prices may continue to rise.Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBP/USD price trend may soon reverse lower despite the fact traders remain net-short.
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