- GBP / USD manages to find some support near 1.3050 and rallies more than 50 pips in the last hour.
- A modest rally in equity markets weighs on the safe-haven USD and supports the pair’s upward move.
- Lingering Brexit-related uncertainties could limit any runaway rally in the British pound.
The pair GBP/USD has risen more than 50 pips in the last hour, with the bulls looking to take advantage of momentum above the 1.3100 level.
The pair has managed to find decent support near the 1.3050 region and for now, appears to have halted this week’s retracement decline from six-week highs, set on Wednesday. The US dollar has struggled to maintain its initial gains and has been met with new selling during the European session, which in turn has been seen as a key factor that has provided a small boost to the GBP / USD pair.
Despite the uncertainty about the next round of fiscal stimulus measures in the US, news of the first approved treatment for coronavirus has boosted investor confidence and sparked a modest rally in equity markets. It’s worth noting that Gilead Sciences received approval from the US FDA on Thursday for its antiviral therapy to treat the virus.
However, lingering Brexit-related uncertainties could prevent bulls from opening aggressive positions and limit any upward movement uncontrolled GBP / USD pair. The UK and the EU resumed talks on a trade deal on Thursday, although investors remain concerned about disagreements on key points: access to fishing and a level playing field.
The EU’s chief Brexit negotiator, Michel Barnier, had warned on Wednesday that a level playing field remains a fundamental concern and that there will be no trade agreement without a just solution for fishing. This warrants some caution for the bulls before aggressively positioning themselves for any further short-term bullish movements for the GBP / USD pair.
Regarding economic data, The UK Manufacturing PMI preview was slightly better than market expectations, dropping to 53.3 points in October from 54.1 the previous month. This was largely offset by a larger-than-expected drop in the indicator for the services sector, which fell to 52.3 during the month reported from 56.1 points in September.
Market participants are now awaiting the release of preliminary US Manufacturing and Service PMI figures. This, along with developments related to US fiscal stimulus and overall market risk sentiment, will influence the dynamics of USD prices. Apart from this, Brexit-related news could also generate some significant business opportunities.
Credits: Forex Street
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
