Trending Higher Despite UK Unemployment Rise

GBP price, Brexit news and analysis:

  • The trend higher in GBP/USD that began last Wednesday is looking increasingly significant, with the pair now seemingly established above the 1.30 level.
  • UK unemployment data released this session were worse than expected yet GBP/USD barely reacted, also suggesting some underlying strength.
  • A more significant break higher, however, may have to wait for the European Council meeting that begins Thursday and has the post Brexit relationship between the EU and the UK on the agenda.

GBP/USD well placed to advance further

The trend higher in GBP/USD that began last Wednesday is looking more and more important, with the pair now seemingly established above both the psychologically significant 1.30 level and the 50-day moving average. From a technical perspective that implies further gains are on the way, although perhaps not before Thursday’s two-day gathering of EU leaders at a European Council meeting that will take stock of the implementation of the Brexit withdrawal agreement and review the state of the negotiations on the future EU-UK relationship. They will discuss preparatory work for all scenarios after January 1, 2021,” according to the meeting agenda.

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Thursday is also important as the deadline set by UK Prime Minister Boris Johnson, although the EU’s chief negotiator Michel Barnier has said that Brexit negotiations will continue after that date, and a bare-bones deal by the year-end is still the most likely option.

GBP/USD Price Chart, Daily Timeframe (July 13 – October 13, 2020)

Latest GBP/USD price chart.

Source: Refinitiv (You can click on it for a larger image)

UK unemployment data disappoint

Meanwhile, in another suggestion of underlying strength in GBP, the currency slipped only modestly after worse than expected UK unemployment data released early in today’s European trading session.

UK unemployment data.

Source: DailyFX

UK Chancellor of the Exchequer Rishi Sunak said again Tuesday that his priority remains to slow the rise in job losses although he is replacing his £50 billion subsidy scheme that expires at the end of this month with a less generous program.

of clients are net long.

of clients are net short.

Change in Longs Shorts OI
Daily 16% 9% 12%
Weekly 6% 4% 5%

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— Written by Martin Essex, Analyst

Feel free to contact me on Twitter @MartinSEssex

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