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The GBP/USD exchange rate rallied sharply at the start of the new week to only be rejected at levels above 1.30, suggesting the market requires a fundamental narrative to break it out of its recent range says Richard Perry of Hantec Markets.
Elevated levels of intraday volatility are still a feature of GBP/USD trading right now.
Once more we saw a rally into 1.3000 failing to hold yesterday and GBP/USD dropping back -75 pips into the close.
It is indicative of the constant swing back and forth not only of USD expectations but also on GBP with uncertainty over Brexit trade deal developments.
GBP/USD is subsequently stuck in a sideways range.
Support has developed at 1.2845 but the rallies have faltered between 1.3000/1.3080 repeatedly over the past six weeks.
Trading within a clutch of neutral moving averages, we also see RSI and MACD momentum indicators almost dead neutral.
It looks that is will be a newsflow driven breakout for GBP/USD, so we watch US fiscal stimulus and Brexit trade deal developments again.
The 48 hours deadline for the talks between the Democrat leadership and the White House over fiscal stimulus comes to pass today.
Democrat House Speaker Nancy Pelosi said over the weekend that Tuesday was the final point at which the stimulus could be delivered before the Presidential Election, two weeks from today.
Whilst there have been fluctuations on Wall Street indices, it is interesting that currency and commodities markets have all but lost direction now.
According to Pelosi’s camp, they have “continued to narrow their differences” but we have been thrown back on forth on several occasions over recent weeks on this stimulus package.
With the potential to use the failure to deliver on stimulus as a political football in the last run up to the election day, we do not hold out much hope that anything positive will be agreed.
If this is the case, then a jolt to sentiment could be seen in the coming days, before markets settle in for the prospects of a Biden victory to the White House.
Biden holds a 10% lead in the averaged polls, whilst also leading in many of the 'swing' states.
As for today’s session, there is a mix of sentiment on markets, with little real direction on USD (downside on AUD came after dovish RBA comments with NZD falling in sympathy).