British Pound Sterling Price: GBP/USD falls as the UK Braces for a new post-Brexit normal

GBP/USD Price Analysis: Pound dropping sharply, nearing 1.3000 figure

The market is essentially ranging above the 100/200-day simple moving averages (SMAs) and an ascending trendline. 

GBP/USD four-hour chart

The pound is dropping sharply from the upper range of the last month of trading. Bears are likely back in control and a break below the 1.3010 support can lead to the 1.2967 and 1.2900 levels, according to the Technical Confluences Indicator. Resistances are seen near the 1.3035, 1.3080 and 1.3129 levels. Read more...

Sterling Falls as the UK Braces for a New Post-Brexit Normal

There was a divergence between the US and Chinese stock market today. Chinese stocks had their worst day in almost five years as investors continued to worry about the spreading coronavirus. They are worried that the disease will have a negative impact on the country’s economy. Just today, Hong Kong closed most of its border crossings with mainland China in an effort to curb the virus. China has accused some countries of overreacting to the outbreak. The country blamed the US for spreading fear instead of offering assistance to the country. Just last week, Wilbur Ross, the US trade secretary said that the virus would be beneficial to the US economy.

US futures rose today as investors appeared to downplay the virus. They are possibly looking ahead to corporate earnings. This week, more than 80 companies in the S&P500 are expected to report. Among the key companies to watch will be General Motors, Alphabet, Sysco, and Ralph Lauren among others. The earning season so far has been good. About 226 companies in the S&P500 have already reported. 70% of these companies have beat analysts’ consensus while 10% of them have met. 20% of these companies have missed the consensus estimates.

The British pound declined sharply today as the market reacted to the new normal. The UK left the European Union on Friday. The country will now enter a period of negotiations as it tries to get a good deal with the EU. Boris Johnson has said that the UK will not be bound by EU’s rules. On the other hand, the EU chief negotiator, Michel Barnier has insisted that such rules must apply. Meanwhile, the market received positive PMI data from the UK. In January, the manufacturing PMI data rose to 50. This is the first time it has reached this level since May last year. Read more...

Brexit: GBP/USD expected to be vulnerable until more clarity emerges - Rabobank

UK PM Johnson and EU Chief negotiator Barnier have been laying out their stalls ahead of the forthcoming UK/EU future relationship talks and the signals suggest that those talks could be testy. That's why analysts at Rabobank see risks of GBP/USD trading below the 1.30 level on a 1 and 3-month view as the talks progress.

Key quotes

"The move lower was no doubt exacerbated by last week’s surge which followed the BoE’s January 30 decision to leave rates on hold. Month-end flows have probably also played a part in the volatility." Read more...