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GBP/USD: (Temporary?) Calm Continues

GBP/USD has been trading in a narrow range amid a calmer market mood. The ongoing Brexit impasse is weighing on the pound. The technical chart is showing the pair holding onto the uptrend channel.
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FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market and was founded in 2000. The website offers a wide range of tools and resources: 24/5 currency news, real-time economic calendar, advanced rates and charts, educational webinars, analysis reports, forecasts, Learning Center, newsletters, industry services, FX customizable studies… As its distinctive trademark, the portal has always been proud of its unyielding compromise to provide neutral and unbiased information and to enable its users to take better and more confident decisions. FXStreet has managed to gain the collaboration of the entire Forex industry, from individual professionals and small companies right up to Forex Brokers and Investment Banks. FXStreet covers the FX Market 24/5: an expert team of journalists, traders and economists picture what the market is doing and what is happening as it happens. Besides the main website in English, the portal is available in 16 other languages (English, Japanese, Simplified Chinese, Traditional Chinese, Spanish, Russian, Arabic, Turkish, Indonesian, Portuguese, German, French, Italian, Hungarian and Vietnamese, Korean and Catalan). FXStreet was short listed as “Best e-FX initiative of the year (vendor)” for the FX Week e-FX Awards 2010.

  • GBP/USD has been trading in a narrow range amid a calmer market mood.
  • The ongoing Brexit impasse is weighing on the pound.
  • Thursday’s technical chart is showing the pair holding onto the uptrend channel.

Can cable traders finally enjoy the summer, or is this the calm before the next storm? Trade tensions have somewhat eased and while the Brexit clock is ticking, there is nothing to move markets – for now.

Starting with the trade war that has rattled markets, today’s market mood is decidedly calmer. China has fixed the yuan reference rate at a lower level with USD/CNY topping 7.00 – but maintained restraint and has prevented its currency from falling fast. The move by the second-largest economy is helping stocks recover and money flow out of safe-haven bonds. Wednesday’s rush to bonds and the resulting fall in yields has sparked worries of a recession.

It is essential to note that US-Sino relations are far from being resolved, with uncertainties about tariffs, currency rates and technology. A tweet from US President Donald Trump, a promise to retaliate from Beijing or any other move may re-intensify relations once again. The two economic giants are still set to meet in September in Washington for high-level trade talks.

UK Foreign Secretary Dominic Raab has visited the American capital and has received support for a US-UK trade deal following Britain’s exit from the EU. Raab – an outspoken Brexit hardliner – has blamed the EU for the current impasse. The Irish backstop is the center of controversy. The government has reiterated its position that it will leave the bloc by October 31st – deal or no-deal.

Dominic Cummings – PM Boris Johnson’s special adviser – has hinted that the government may move forward in bypassing parliament to ram through a no-deal Brexit. There are reports of a rebellion within the pro-Remain ranks of the Conservative Party and a possibility of joining hands with the opposition parties to block such a move. Speculation about an emergency national unity government has also risen – but seems unlikely for now.

The UK releases its quarterly GDP report on Friday, and it is expected to show stagnation.

GBP/USD Technical Analysis

GBP USD technical analysis chart August 8 2019

GBP/USD is trading in an uptrend channel since the beginning of August. At the time of writing, cable is closer to its uptrend support. In its recent sideways trading, GBP/USD has moved above the 50 Simple Moving Average on the four-hour chart. Momentum is positive but remains weak.

All in all, the picture is marginally bullish.

Resistance awaits at 1.2210, which capped the pair earlier this week. Further up, 1.2250 was the post-crash recovery high. Next, we find 1.2380 and 1.2420, both predating last week’s downfall.

Support awaits at 1.2130, which proved to be a valid level earlier this week. It is followed by 1.2075 – the 2019 low. Next, 1.1195 and 1.1866 await GBP/USD.

Equities Contributor: FXStreet

Source: Equities News

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