2020-10-22 • Updated
Brexit is stalled, but both the EU and the UK express hopes for a successful resolution. These hopes recently sparked an aggressive spike the GBP went on against the EUR and the USD. What’s the technical outlook?
As surprising as it may sound, those strong moves don’t introduce any change into the existing trends. On a daily chart below, the last large green candlestick is exactly the rise of GBP/USD on Wednesday. The move was really big and doesn’t even have a similar one in magnitude on this panorama. But tactically, it falls well into the uptrend that has been in the place since the middle of September. From below 1.30, GBP/USD rose above 1.31. Most probably, it will go into bearish correction above 1.30 to eventually reverse and rise back above 1.31 on the other side of the uptrend.
Pretty much the same applies to EUR/GBP. After hanging above 0.9040, it plunged down to almost 0.9000. Tactically, that’s just another wave in in a local downtrend that has been in the place since the middle of September. A large one though – you can see that last long red candlestick between 0.9150 and 0.9000. Strategically, that downtrend itself is just another wave in a larger gradual uptrend that’s visible all across the chart. So the observers are right to say that Brexit is merely a local episode for the UK economy – the fundamental factors is what matters.
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