GBP/USD Will Likely Fall Further, FTSE Up

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GBP price, news and analysis:

  • GBP/USD dropped through trendline support Tuesday and now faces a further fall to the 200-day moving average at 1.2655. If that fails to hold, more weakness can be expected.
  • The UK announced new restrictions on pub and restaurant opening times Tuesday after a surge in Covid-19 cases this month and warned that the measures could last for six months.
  • Meanwhile the FTSE 100 is benefiting from the weakness of GBP.

GBP/USD heading lower still

GBP/USD continues to weaken on concerns about a lackluster economic recovery globally, spurring further risk aversion in the markets and lifting the safe-haven USD to a two-month highs as measured by the USD index.

GBP/USD Price Chart, Daily Timeframe (July 17 – September 23, 2020)

Latest GBP/USD price chart.

Chart by IG (You can click on it for a larger image)

The support level that broke Tuesday was a trendline connecting the recent daily lows. Now, a drop to the 200-day moving average at 1.2655 is plausible and, if that breaks, there is little further support ahead of the mid-July lows.

Change in Longs Shorts OI
Daily10%-3%3%
Weekly-8%4%-2%

Sterling traders have taken badly news of fresh curbs to avoid a second wave of Covid-19 infections in the UK, and the consequent weakness in GBP/USD has helped lift the FTSE 100 index of the largest London-listed stocks – many of which have overseas earnings and therefore benefit from a weaker Pound when those earnings are repatriated to the UK.

FTSE 100 Price Chart, Daily Timeframe (July 17 – September 23, 2020)

Latest FTSE 100 price chart.

Chart by IG (You can click on it for a larger image)

Change in Longs Shorts OI
Daily-9%11%-4%
Weekly32%-24%9%

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— Written by Martin Essex, Analyst

Feel free to contact me on Twitter @MartinSEssex

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