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The Brexit series continues, the pound up

The Brexit series continues, the pound up

created Marcin KiepasSEPTEMBER 21, 2020

Trade negotiations between the European Union and the UK will continue, and a new agreement it can be worked out by mid-November. It was these reports that were behind the pound's appreciation on Wednesday.

The pound goes up considerably

On Wednesday, the pound clearly appreciated against the currency basket. Including the dollar and Polish zloty. Course GBP / USD it broke with force above the local peak of October 12 this year. (1,3083), testing levels not seen since the first half of September, and above all opening the way for further gains.

The increases in GBP / USD went hand in hand with the increase in GBP / PLN. Especially that the zloty additionally lost under the influence of disastrous covid statistics in Poland. As a result, the pound increased from PLN 4,9890 yesterday at the end of the day to PLN 5,0660 and reached its maximum from September 29 (PLN 5,0665). It is also on the verge of breaking this resistance, which, similarly to GBP / USD, would open the way to strong gains.

The day for the pound began with the publication of September's inflation data in the UK. Both CPI and core CPI inflation slightly increased. However, the data were in line with expectations and they were not the reasons behind the subsequent strengthening of the British currency.

The pound appreciated sharply after reports that the trade negotiations between the European Union and the UK, suspended last week, are to be resumed. Their truthfulness was additionally confirmed by the European negotiator Michel Barnier, who admitted that an agreement with Great Britain was within reach.

GBPUSD Daily_21102020

GBP / USD chart, D1 interval. Source: MT4 Tickmill.

Today's gains in GBP / USD, including breaking the local high from the first half of the month, strongly affected the balance of power on the daily chart. The broken resistance in combination with the visible pro-growth formation of the inverted head and shoulders paves the way for the pound even to the September high at 1,3482. However, the supply will definitely defend the levels above 1,33 a lot.

GBPPLN Daily_21102020

GBP / PLN chart, D1 interval. Source: MT4 Tickmill.

The GBP / PLN pair is just a step away from generating a strong demand signal. Such a signal will be a break above the resistance at PLN 5,0665. If this happened, and the balance of forces on the daily chart indicates that it will be so, then the pound will have an open road to the level of PLN 5,20.

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About the Author
Marcin Kiepas
Tickmill UK analyst. Financial markets analyst with 20-year experience, publishing in Polish financial media. He specializes in the foreign exchange market, Polish stock market and macroeconomic data. In his analyzes he combines technical and fundamental analysis. Looking for medium-term trends, examining the impact of macroeconomic data, central banks and geopolitical events on the financial markets.

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