GBPUSD Breaks 1.2800 Again and a Move Lower Looks Likely

Summary:

The GBPUSD pair has broken below support levels again after the U.K. moved to introduce further virus restrictions on Monday.

GBPUSD has broken below support levels again after the U.K. moved to introduce further virus restrictions on Monday. Curfews on hospitality opening times, alongside restrictions on gatherings, were among the new measures.

The pound had already been reeling from the return of Brexit headlines and sterling sees further risk from the looming October deadline. European Commission Vice President Valdis Dombrovskis, and president Ursula von der Leyen were both hopeful a deal can still be agreed ahead of the mid-October target.

Today sees a packed speech line-up with Bank of England Governor Andrew Bailey, Fed Chair Jerome Powell’s testimony, Treasury Secretary Mnuchin, and two Federal Reserve Governors all on deck for comment. There is clear headline risk here and we may see the market move on comments.

The medium-term picture looks fairly clear with the BoE signalling a potential move to negative interest rates by year-end, while the Federal Reserve have made no such commitment. The pound also carries risk from the Brexit situationa and the potential for stricter lockdown restrictions.

GBPUSD Technical Outlook

The GBPUSD pair attempted a bounce from the 1.2800 level and this failed at 1.3000. The second break of 1.2800 now sees 1.2500 in view. The price would need a push back above the 1.2800 level to see further gains. The Investing Cube team is currently available to assist all levels of traders with a Forex Trading Course or one-to-one coaching.