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Oct 13 - 09:55 PM

GBP/USD - COMMENT-Wednesday's Close Key For Sterling As Tough Winter Looms

By Andrew M Spencer  —  Oct 13 - 09:00 PM

Sterling's 1% drop on Tuesday was inspired by a cocktail of factors, as the dollar firmed on coronavirus vaccine issues and U.S. stimulus uncertainty nL1N2H20AH, while UK jobs data disappointed nL8N2H40ZP and the Brexit impasse continued.
Wednesday's close will be a good guide to the next move.

The UK faces a tough winter, with unemployment set to extend as a broad job-protection plan ends this month. The Bank of England has forecast a 7.5% jobless rate and 2.6 million unemployed by year-end nL8N2GX66W.
The government is struggling to contain the coronavirus nL8N2H30NJ, while the UK vaccine chief said the first round of vaccines is 'unlikely to end the pandemic' nL4N2H44QI.

Brexit negotiations are nearing the endgame with both sides expressing the desire for a deal, but no movement on the key issues, so no deal or a very bare-bones deal looks likely nL8N2H44FM.

Sterling's September-October bounce saw 1.3079-1.3084, 50% of the September fall and the upper 21-day Bollinger band, a good indicator of an overbought market, unsuccessfully tested.
The reversal turned positive daily technical signals to neutral.
A close below the 21-day moving average would be bearish, opening a test of the 1.2701 lower 21-day Bolli band, as in September.
A stronger close would suggest that the September-October bounce remains alive.

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Refinitiv IFR Research/Market Commentary


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