During Thursday’s European trading session, the GBP/USD currency pair failed to extend its previous 3-day winning streak and hit the intra-day low near below the mid-1.2900 level. Hence, the selling bias around the currency pair was triggered by the doubts over the Brexit-positive headlines ahead of the key Bank of England (BOE) monetary policy meeting. Additionally weighing the quote could be the rising number of coronavirus (COVID-19) in the U.K., which eventually undermined the British Pound and adds extra burden around the currency pair.
Apart from this, the broad-based U.S. dollar on-going strength, backed by the Federal Reserve’s (Fed) cautious optimism, also adds extra burden around the currency pair.
At the coronavirus front, the currency pair bearish moves were further bolstered by the rising virus cases in the U.K. As per the latest report, and the United Kingdom reported nearly 4,000 new daily cases of COVID-19, government figures reported on Wednesday, with the total figures of daily cases at its highest mark since May 8. Meanwhile, the PM Johnson’s concern about the testing capacity and a lack of a virus vaccine also undermined the currency pair.
Across the pond, the intensifying tensions between the U.S. and China also added a burden around the market trading sentiment. It is worth recalling that President US Trump recently warned the World Trade Organization for their favoring tone to China against the Trump administration’s decision to levy multiple trade sanctions on China. However, these gloomy headlines exerted downside pressure on the market trading sentiment.
As a result, the broad-based U.S. dollar continued its bullish rally and still reported gains on the day due to the market’s risk-off sentiment. Moreover, the upbeat prediction for the U.S. unemployment data also helped the greenback put the fresh bids. Let me remind, the U.S. dollar initially saw losses in the wake of the Fed’s comments and disappointing U.S. retail sales data but gradually erased the losses after the Fed hinted economic growth to improve from the COVID-19. However, the gains in the U.S. dollar kept the currency pair under pressure. Whereas, the U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies was up 0.45% to 93.543 by 12:24 AM ET (5:24 AM GMT).
Looking forward, the market traders will keep their eyes on the USD moves amid the lack of major data/events on the day. The risk catalyst like geopolitics and the virus woes will be key to watch for the fresh direction, not to forget the Brexit.
The GBP/USD is trading at 1.2909 level, holding within an upward channel supporting the pair at 1.2909 level. The closing of the recent Doji candle over the EMA and upward trendline support level of 1.2909 level suggests odds of upward movement in the market. Considering this, we may have some upward trend in the Sterling ahead of the BOE rate decision. Thus, we should look for a buying trade with a target of 1.2996 level. Violation of 1.2909 le el can trigger selling bias until 1.2828 level, but it depends upon the policy decision today.
Entry Price – Buy 1.29247
Stop Loss – 1.28847
Take Profit – 1.29647
Risk to Reward – 1:1
Profit & Loss Per Standard Lot = -$400/ +$400
Profit & Loss Per Micro Lot = -$40/ +$40
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