GBP/USD: Recent recovery to be short-lived

GBP/USD has stabilized amid reports of progress in Brexit talks but the surge in coronavirus cases and uncertainty about the US elections are set to push it lower. Furthermore, Thursday's 4-hour chart is pointing to the downside, as FXStreet’s Analyst Yohay Elam notes.

More:

• GBP/USD: Lockdown fears to overshadow positive Brexit news – MUFG

• GBP/USD: The likelihood of a Brexit agreement is increasing, pound to rally 8-10% – Westpac

Key quotes

“Britain and the bloc are still at odds over the politically sensitive topic of fisheries. The minuscule sector in both the UK and France is pressing on politicians to take a tough stance and talks may still result in acrimony.”

“The northern hemisphere is gripping with a harsh second wave of COVID-19. Both France and Germany announced new national lockdowns on Wednesday, and it seems like a matter of time until others follow. Prime Minister Boris Johnson is under growing pressure to abandon his regional approach and announce nationwide restrictions. UK covid statistics are breaking records almost on a daily basis. The upcoming publication, due in the afternoon, is set to move the pound.”

“Tension is mounting ahead of the elections. Despite models pointing to near 90% of a victory for Democrat Joe Biden – and the fact that over 75 million Americans have already cast their ballots – the memory of 2016 is looming. Moreover, the incumbent refused to commit to accepting the results, raising the chances of a contested election. Additional opinion polls are awaited on Thursday and could cause the safe-haven dollar to further appreciate in response to fears.” 

“The round 1.30 level remains a battleground. It is followed by Wednesday's swing low of 1.2920, followed by 1.2860. Resistance is at the daily high of 1.3020, followed by 1.3060 and 1.3080, recent swing highs.”