Search ForexCrunch

GBP/USD recorded fresh 5-week highs around 1.3080 at the beginning of the week on the back of renewed optimism surrounding the UK-EU Brexit negotiation. Next on the upside aligns 1.3100 but cautiousness is seen growing ahead of the EU Summit, FXStreet’s Pablo Piovano reports.

See: GBP/USD to recede from the corrective target at 1.3070 – Commerzbank

Key quotes

“The recent upside is predicted to remain contained ahead of key events later in the week. Looking at the broader picture, it is worth recalling that the sterling faces a combination of a dovish stance from the Bank of England, the unabated advance of the pandemic in the UK (that could undermine the economic recovery) and political uncertainty as the handling of the coronavirus crisis by Number 10 faces increasing public disapproval.”

“A favourable outcome for the quid at the EU Summit could initially lift GBP/USD to the 1.3100 area and should open the door at the same time to a potential move to the Fibo level just below 1.3200 the figure. Further upside to the 2020 highs around 1.3480 (September 1) is seen unlikely for the time being.”

“On the downside, the loss of the 1.3000 level carries the potential to re-visit the 1.2870 area (Fibo level) ahead of the key 200-day SMA, today at 1.2709.”