UK Lockdown Pushing GBP Pairs lower: GBP/USD. GBP/CAD, GBP/AUD
Joe Perry November 2, 2020 6:19 PM
Headline risk is huge this week!!
Over the weekend, PM Boris Johnson announced that the UK will enter a national lockdown from Thursday until December 2nd, when the current local tier system will be used again. Although restaurants and bars and non-essential stores will close as they did in the first lockdown, schools, colleges and universities, and manufacturing businesses will remain open. Combine this with Brexit jitters and an expected dovish BOE on Thursday, the Pound pairs are anxious.
For complete analysis of GBP/USD, please see Currency Pair of the Week.
GBP/CAD has been trading in a symmetrical triangle since late July. Currently the pair is at support in the middle of the triangle at support near 1.7100. Watch for the pair to trade lower to the bottom, upward sloping trendline of the triangle near 1.7000, especially if Crude Oil trades higher (which means stronger Canadian Dollar, therefore weaker GBP/CAD).
Source: Tradingview, City Index
GBP/AUD was trading higher into mid-October, however with uncertainty surrounding Brexit and strengthening fundamentals in Australia, the pair began moving lower, Today the pair briefly pushed through horizontal support near 1.8320 and bounced, currently holding that level. If the pair does break lower, next support is near 1.8250, which is the 50% retracement level from the lows of October 14th to the highs of October 20th. Short term horizontal resistance is near 1.8360, then the previous highs at 1.8525.
Source: Tradingview, City Index
As mentioned in the Currency Pair of the Week, please be sure to trade GBP pairs lightly this week, with tight stops and small size. Headline risk is huge this week!!
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.