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May 20 - 09:48 AM

GBP/USD - COMMENT-Sterling Extends Gains On Reduced COVID Angst, EU Aid Optimism

By Paul Spirgel  —  May 19 - 10:40 AM

GBP/USD is holding onto recent gains, +0.38% at 1.2240, finding support in London afternoon by the 10-HMA at 1.2232.
Sterling bulls have hitched a ride on broad dollar weakness as virus-related lockdowns ease, optimism grows over the Franco-German proposal to add to prodigious global government aid nL1N2D10JV and apparent progress in the search medical solutions to COVID-19. Cable is shrugging off talk of UK negative rates and fears of a no-deal Brexit event on Dec.
31 as EU-UK trade negotiations remain at an impasse nS8N2CF015. While hopeful news about the pandemic will help sterling by reducing safe-haven flows to the dollar, GBP/USD's fate ultimately may rest more with EU-UK relations. To mount a rise toward multiple DMA resistance near 1.2400 and more significant resistance by the 100- and 200-DMAs, signs of progress in trade talks must emerge to assuage fears of a no-deal exit at year-end. With the post-coronavirus reopening just getting started, a hard Brexit probably wouldn't help EU or British economic prospects.


GBP Chart: Click here

Source:
Refinitiv IFR Research/Market Commentary

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