Chart of the day: GBPUSD
The pound registered its biggest monthly rise in more than a decade last month. Gains were mainly due to a weaker dollar after a surge in US coronavirus cases and political stalemate on a relief bill.
Fears of a second wave of infections in Britain, already the hardest-hit European country and a weak economy suffering growing pressure to strike a Brexit trade deal before a transition period ends in December have capped the pound’s advance and may drag the GBP back to $1.297 in the last quarter of the year. Investors expect the UK and EU to eventually agree a free-trade deal, but talks have been troubled.
RSI shows an overbought sterling, suggesting the climb may stop at $1.321 setting a narrow range before the EU summit in October while in the shorter term, high volatility is to be expected if the US Congress agrees another stimulus package and in the event of any surprises coming today from the US labour figures.
