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Pound Drifts as Brexit Decision Day Looms

October 16, 2020


The GBP is drifting to the start of today, with the GBP/USD pair back under $1.2900 ahead of the European trading session, but momentum looks unlikely to retest lows of $1.2863 seen earlier this week.

GBP’s outlook is currently more bearish to the near-term. A break below both the hourly moving averages yesterday, and a drop in GBP/JPY pair below its key daily moving averages yesterday is hindering pound sentiment.

A lot rides on the next move by UK prime minister, Boris Johnson. He is expected to give a response as to whether the UK will want to continue with negotiations beyond this week after what Frost described to be an “unusual” approach by the EU after they no longer committed to working “intensively” towards an agreement.

If P.M. Johnson keeps hopes of a deal alive, the GBP could rally on the headlines but there will likely be resistance around the $1.3000 mark. Recent highs closer towards 1.3050-83 will limit any near-term gains, as optimism is likely to fade.

It should be noted that even when Johnson makes a statement, it does not mean we are any closer to a Brexit deal being agreed, but that there is merely a slightly hopeful chance.

However, considering that we’ve been in this same situation several times before. There is every likelihood that a new deadline will get pushed back to the end of December. And again there is every possibility that another change in date could happen after this. Realistically any confirmation of a deal could be well into next year.

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