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  • Cable looks to 1.3200 as US dollar extends the slight on the US mid-term election outcome.
  • Brexit-related news and USD dynamics to drive the GBP markets in the day today.

The bulls are extending control heading into the mid-European session, with the GBP/USD firmly higher above the midpoint of the 1.31 handle, as the US mid-term election results continue to weigh down on the US currency.

Markets are skeptical whether Trump’s policies will change after the Republican loss in the House, as the Democrats secured the win that triggered a broad-based US dollar weakness. Democrats secure the 218 seats needed to gain control of the House of Representatives

The US dollar selling remains unabated, now pushing the Cable to three-week tops near 1.3170 region, as the bulls look set to conquer the 1.32 handle. Some optimism over the Brexit deal also appears to add extra legs to the GBP bounce, especially after the EU’s Tusk and UK PM May were said to have spoken over the phone to discuss Brexit progress.

More so, the Irish PM Varadkar’s comments, citing that it’s possible to reach an agreement on Brexit in November, further bolstered the bullish tone around the spot. Also, the risk-on rally on the European equities collaborates to the upsurge in the risk-currency – the pound.

Calendar-wise, there is nothing of note to be reported later on Wednesday and hence, all eyes remain on the Brexit developments, USD price-action and the Fed rate decision for near-term trading opportunities.  

GBP/USD Technical Levels

Mario Blascak, PhD, FXStreet  , notes: “The key area of resistance at 1.3085 representing 23.6% Fibonacci retracement of Sterling from 2018 high of 1.4377 to 2018 low of 1.2662 was broken and the currency pair is now in the run for 1.3200 and 1.3240 next. Moreover, the move above 1.3100 is likely to generate a golden cross formation on a daily chart, the crossover of a 50-day moving average and a 100-day moving average, indicating a further move towards targeted levels.”