GBP/USD Eyes Brexit Negotiations
MaiMarFX | Nov 16, 2020 10:07
The U.S. dollar is weakening amid concerns about a sustainable economic recovery and this weakness is pushing other peers higher in return. Despite the optimism about a Covid-19 vaccine breakthrough there will be many economic challenges in the months ahead. Amid the escalation of coronavirus cases in Europe and the U.S., Germany’s economy minister said that Germany must live with “considerable restrictions” against the spread of Covid-19 for at least the next four to five months.
With this in mind, we may see the euro retreating from its highs but this will also depend on the market’s risk appetite.
Elsewhere, Brexit negotiations between the U.K. and European Union enter another crucial week while the time to reach a deal is running out. Both sides have to make big progress this week, so we could see some volatile movements in the pound.
GBP/USD
Looking at the technical picture we see the pound trading with an upward tilt, remaining within its recent upward trend channel. If it is able to climb above the 1.3270-80 barrier, we may see a run for a higher target at 1.3410. However, the price action will depend on a Brexit breakthrough and if there is none, the pound could quickly fall below 1.3150 and 1.31.
We also bear in mind that the pound is overbought in short-term time frames, making a correction more likely now.
EUR/USD
The euro’s rise is primarily caused by the weakening dollar so gains in this pair might be limited. We see a crucial resistance area between 1.1910-1.1940 which could limit the euro’s rise.
DAX
Equities benefited from optimism on the vaccine front and this rally is evident in the DAX’s recent uptrend. Next resistances are coming in at around 13300 and 13500 whereas an important support remains intact at around 13000.
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