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With the reveal of the draft accord between the U.K. and European Union backed a free-trade pact and close cooperation after Brexit, Pound saw a surge from 1.27868 to the high price of 1.29278. However, the missing details offset the passion. Close price yesterday locked on 1.28882 around. On the other side, thanksgiving holiday holds back the trading in the market. Greenback performed weakly for the consecutive two days. What’s worse is from the oil’s plunge.
Most thriving news for the Sterling bull position is in the recent weeks released on yesterday night. Sterling gained more than 1 per cent to the past-week high after the claim reduced the uncertainty about the relationship after the U.K. leaves EU, the adversity on the trading is enormous to both sides. The statement negotiated ahead of an EU summit on Sunday to sign off on a Brexit deal, also makes clear that both sides are committed to substituting the contentious backstop to avert hard border with Ireland. The reversal merged when EU declared some issues have yet to be resolved. Thousands of miles away from the site, Scottish First Minister Nicola Sturgeon allege that the deal is full of ‘unicorns’ instead of facts. Spain will stand against the deal as the member of EU since the uncertainty on the territory conflict with the UK. Whether May will obtain the support for the deal in the party remained uncertain. More story to tell on the weekend.
On the other side, the US dollar dropped for two days partially due to the thanksgiving responsiveness. However, the critical driver to crumble the dollar derived from the downward pressure of the oil price. The daily output of the crude oil reached 1.09 million barrels. UKOIL has the reported close price at 62.53 dollars per barrel, and USCL said the rate to be 53.86. Both of the pairs is closing to the yearly low as the largest marginal oil product producer. The American economy may get affected due to the slump eroded the profitability of one of the largest industry in the USA. Low oil price will persuade the investor to engage in the money-market product to hedge and then abandon the cash. The poor performance is then predictable. The slump will also hold back the process of the rate hike which will lower the competitiveness of USD.
Technically speaking, the GBP/USD pair is inhibited in gaining as technical readings such as RSI lacks the momentum to go north. 61 readings are relatively positive but require the power to boost. Moving average lines are left directionless. The investor should take the extended position when the pair overcome the resistance one 38.2% retracement level and making the short position if the November higher low is penetrated on 1.28422.

Will the gain from Brexit deal sustain after the weekend?

Dec 01 2020