The newly imposed lockdown by Prime Minister Boris Johnson in U.K. is starting to weigh on the sterling amidst Brexit optimism.
The upbeat news in favor of the Brexit seems to be disregarded and the sterling fell due to the sentiment of the lockdowns in United Kingdom. The sterling may also be edging lower due to the cautious sentiment the investors have towards the U.S. Presidential elections which is due tomorrow.
Later this week, the Bank of England will announce its new policy decision that is speculated to deliver a further easy money during this week’s policy meeting.
“Bank of England (BOE) policymakers are expected to inject up to £100bn into the economy when they meet this week amid mounting fears that the four-week lockdown for England will lead to a double-dip recession” – The Guardian
Other than the economic fears, worries that the death toll could be doubled, as indicated by the UK PM Boris Johnson, join a longer than initially anticipated lockdown, at least till early 2021, suggested by The Times, also weigh on the GBP/USD.
In doing so, the Sterling ignores any optimism that the Brexit negotiators from the EU and Britain are tackling the stalemate over the fisheries via the quota system. While the recent talks, which a re to continue this week, suggested a possible solution to the key hurdle, discussion over the UK’s Internal Market Bill (IMB), level playing field and governance are still in limbo, which in turn raise prospects of a no-deal Brexit.
On the other hand, the early polls suggest that President Donald Trump is gaining favor as of late versus its election rival Joe Biden. This will be an interesting key point to watch out tomorrow which will greatly affect the GBP/USD currency pair.
In the daily charts of GBP/USD, the pair edged lower early morning in Sydney session all throughout the Tokyo session.
As what we can see in the daily charts of GBP/USD, the pair is still trading inside the area of support at 1.28907 and resistance level at 1.31966. With the newly imposed one-month lockdown by PM Boris Johnson in U.K., economic activities may be halted for a while, the sterling may fall further against the dollar amidst the uncertainty of U.S. presidential elections and other economic indicators.
Investors and retail traders are once again looking at the dollar as a safe-haven currency. If the pair will continue to breakdown this support at 1.28907, it may fall further in the coming days and will test the support at 1.26878. Traders are pre-cautious in planning out their short positions in this the 1.28907 support area and will further confirm the position once the price breaks down.
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