GBP price, Brexit news and analysis:
- GBP/USD will likely continue to trade sideways ahead of next Thursday’s European Council meeting in Brussels, where EU-UK relations post Brexit will be discussed.
- The 1.30 level is still providing strong resistance and a break above it is unlikely near-term.
- In the meantime, Bank of England Governor Andrew Bailey is optimistic that an EU-UK trade deal can be reached.
GBP/USD looks ahead to EU summit
GBP/USD will likely continue to trade in a narrow range just under the 1.30 resistance level ahead of the European Council meeting that begins next Thursday in Brussels. EU leaders will review the state of the EU-UK negotiations on their relationship after the Brexit transition period ends on December 31 and say they “will discuss preparatory work for all scenarios” after January 1.
The 1.30 level remains important, not just psychologically but also because the mid-September rally stalled there. The 50-day and 100-day moving averages also remain important, continuing to provide resistance and support respectively.
GBP/USD Price Chart, Daily Timeframe (July 8 – October 8, 2020)
Source: Refinitiv (You can click on it for a larger image)
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Bailey optimistic on Brexit deal
Ahead of the European Council meeting, Bank of England Governor Andrew Bailey said he believes the EU and the UK should be able to reach a trade deal, and also that he does not expect the second wave of Covid-19 cases in the UK to be as damaging as the first. “I do think it is in the interests of both sides – let’s be blunt – to get an agreement,” he said in an interview with the Yorkshire Post.
Separately, in a webinar hosted by the European Commission, Bailey said that the risks to the UK economy are “very much to the downside”, that he hopes there will be an EU-UK deal and that the post-Brexit transition period will not be easy.
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— Written by Martin Essex, Analyst
Feel free to contact me on Twitter @MartinSEssex