GBP/USD currency pair continues to move upwards, with expectations high on the Brexit talks. Gov. Bailey’s optimistic speech is positive for the Sterling.
GBP/USD Key Movement
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United Kingdom: There is optimism growing regarding the Brexit talks between the United Kingdom and the European Union. Trade negotiation taking place in Brussels between the UK and the European Union is expected to navigate the Sterling further.
United States: A fresh Covid-19 package has been released that would bring jobless weekly benefits to $600. The new bill will include direct checks for the taxpayer of $1200 and $500 for each dependent.
Eurozone: Manufacturing PMI from the Eurozone is expected on Thursday from Spain, Italy, France, and Germany.
GBP/USD Moves Positively
Brexit negotiators from the European Union have hinted that they are preparing for a joint legal text to bring a trade agreement with the United Kingdom through initial talks.
In the virtual event that took place at Queens University, Belfast, Bank of England, Governor Andrew Bailey said that he had an open mind regarding negative interest rates. Though it has not been implemented, for now, it is an effective tool in the bank’s kitty, he says. Further, quantitative easing can also be implemented if required, says Bailey. The GBP/USD exchange rate continues to drive upward.
The monthly Unemployment Rate in Italy to be released on Thursday is expected to increase to 10.2% from the 9.7% reported last month. The Unemployment Rate in the Eurozone is expected to move up from 7.9% to 8.1%.
Purchasing Power Index in the Eurozone has come down drastically after the pandemic. While it was 0.6%, the data expected on Thursday is only 0.2%.
The US Fights to Stay Above 94 Levels
The first round of debate that took place on Wednesday saw an exchange of bitter remarks between President Donald Trump and rival Joe Biden from the Democratic Party. Further, President Trump has warned that election results might get delayed for months due to the mail-in ballots. The coronavirus cases have not receded, and this adds to the political uncertainty.
The pandemic has cost the world 1 million lives. More than 200,000 deaths are from the US. Data to report on the health of the US economy this week is closely monitored by forex market investors, which includes consumer data on Thursday. Job numbers are to be released on Friday.
Though 200,000 Americans have died from the coronavirus, the economic response has been the best. The Federal Reserve has acted immediately to address the virus effect through various stimulus packages. The stock market rally during this period amid severe downturn has amazed investors.
The dollar, which was at a two-month high has come down with political developments. The stock market saw a rebound after four weeks of decline. House Speaker Nancy Pelosi has said that a deal might be reached, about a new coronavirus relief package, which has induced the stock market to move positively. This is turn, has brought down the dollar.
Unemployment claims are expected to go down from 870K to 850k.
Japan’s Retail Sales saw a decline of 1.9% year-on-year. However, Retail Sales on month-on-month analysis show an increase of 4.6%. Consumer activity has recovered after the coronavirus pandemic.
Industrial Production in Japan saw an increase of 1.7% month-on-month in August. However, on a year-on-year analysis, it has declined by 13.3%.
Technical Analysis On Major Currency Pairs
GBP/USD: GBP/USD pair has moved from 1.2744 levels to 1.2906 this week.
1.30 levels remain a significant barrier for forex market investors in GBP/USD exchange pair. If it goes below the 1.25 level, the currency pair would slide further to 1.22 levels or 1.20 levels.
EUR/USD: The Euro dropped to $1.1612 on Friday, which is its two-month lows, which it has managed to hold on. 1.18 levels remain as resistance.
USD/CHF: USD/CHF moved positively after a two-day losing streak. The dollar demand has pushed the USD/CHF currency pair up to 0.9234 levels, bringing some positive movement to the Swiss Franc. Though the pair briefly left 0.92 levels, it regained ground to move upwards, where it has resistance at 0.9300 levels, seen last in July 2020.
USD/JPY: In the USD/JPY exchange pair, we see that the 105.70 level continues to be strong resistance. If it breaks above this barrier, the currency pair may move towards 106.20 levels. On a break below the 105.65 levels, it may find support at 105.40 levels.
USD/CAD: the USD/CAD currency pair continues to remain within a small range this week. It has support at 1.3345 and 1.3415 resistance level on the upside.
EUR/USD: The EUR/USD currency pair has gone beyond the 1.17 levels to trade at the week’s high. It has support at 1.1630 levels and has resistance at 1.1771 levels.
The US Dollar Index hovers around 94 levels. It has strong resistance at 94.20.
Interbank Exchange Rates on 30 September at GMT 2.48 pm
US Dollar Index (DXY): 93.79