- GBP / USD is moving away from the highs, but it is one of the best performing USD pairs on the day, rising 50 pips or 0.4%.
- The pair is backed by rising expectations for the upcoming departure of British Prime Minister’s Brexiteer adviser Cummings.
- The BoE speech during the European afternoon could give the pair more momentum.
The pair GBP/USD it caught a deal when the European session started on Friday, with the pair rising from overnight lows just above 1.3100 to highs just under 1.3190, before pulling back to trade just above the 1.3150 level. That pair is still trading at gains of roughly 50 pips, or 0.4%.
GBP / USD Boosted With Brexiteers Losing Influence In UK Government
GBP is the best performing G10 currency so far on Friday, with some gains attributed to rising expectations of a departure from the government of special adviser to British Prime Minister Boris Johnson and arch Brexiteer Dominic Cummings. Some analysts have argued that Cummings’ exit from the decision-making folds of the senior UK government improves the chances that the EU and the UK can agree on a free trade agreement to replace the current year-end deal: Cummings is widely seen as the mastermind behind the Leave campaign who successfully campaigned for Brexit in the run-up to the 2016 referendum and is an arch-Eurosceptic who has called for a hard line in negotiations.
Speculation regarding Cummings’ departure (now expected to have left Downing Street for Christmas) has risen in recent days following the resignation of his close colleague Lee Cain, former Communications Director and another close associate of British Prime Minister Johnson.
In terms of the latest on the EU / UK negotiations; A spokesman for British Prime Minister Johnson said this morning that there remains a familiar difference between the two sides on the playing field and fisheries issues, confirming reports earlier in the week that little to no real progress had been made towards a deal. this week. The spokesman added that the talks will stop over the weekend and resume in Brussels next week.
Bailey noted on Thursday that the Bank of England is not considering implementing a yield curve control policy (as currently seen in Australia and Japan), said GDP is in line with the bank’s expectations and did not disclose anything new. on when the bank will complete its review on negative interest rates. Meanwhile, on Wednesday, Tenreyro reiterated its seemingly favorable stance on negative rates, saying that the positive evidence related to negative rates comes from Europe, where it has performed quite well.
Looking at the US dollar side of GBP / USD, the USD has been swinging today, but overall it is a bit weaker and did not respond to the mixed US PPI data for October and the Fed statements. To sum up the latter, New York Fed Chairman John Williams reiterated the points made by Chairman Jerome Powell yesterday (that the economy is improving more than expected and will continue, but the increase in virus cases represents a risk ) and FOMC member James Bullard said there is room for a drop in the unemployment rate to 4.9% in the coming months.
GBP / USD in a range between the big figures of 1.31-1.32
Amid the lack of any notable levels of support or resistance to the immediate upside or downside, GBP / USD may well continue to oscillate between the parameters of 1.3100 to 1.3200 as long as the USD remains subdued.
The psychological level of 1.3200 should offer resistance as it also coincides with the November 11 low and November 9 high. On the downside, the next notable support beyond the 1.3100 psychological level is the 21-day moving average at 1.3048.
Looking at GBP / USD more broadly, the pair has maintained its medium-term bullish bias within an uptrend channel; This channel links (approximately) the lows of September and the end of October / beginning of November (approximately 1.2700 and 1.2900 respectively) to the downside, and the highs of mid-September to the maximum of October, to the maximum of this month (approximately 1.3000, 1.3160 ​​and 1.3300 respectively).
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