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alexclark62

Daily FX Research




GBPUSD fell in over night trade as Boris Johnson announced tougher lockdown measures across the UK coupled with the approval of US fiscal stimulus package. The US approved $900Bn stimulus packaged aimed at supporting small businesses and providing $600 checks for individuals.


Brexit

The UK government tightened travel restrictions in response to the new variant of COVID-19 while 10 European countries banned travel from the UK. Over the weekend the deadlock on fishing rights continued to stall negotiations, with officials wondering whether a phone call between Boris Johnson and Ursula von der Leyen could help break the impasse.


Emmanuel Macron demanded that French fishing boats could continue to use British waters to fish after Brexit. Mr Johnson however remains firm that this is an unacceptable violation of sovereignty. Both sides still seem far apart on fishing rights.


US Stimulus

The deal is the second largest stimulus package in US history, after the $2.2Tn CARES Act in March. Months of deadlocked negotiations have been broken at a time when the US economic recovery looked to be stalling. The Senate Majority Leader also said the package would "renew and extend" federal unemployment benefits for millions of Americans who have lost their jobs due to the pandemic and include another round of direct payments.


The CARES Act gave $1,200 per adult, while the latest package will give $600 per individual , $1,200 per married couple and $600 per child. The new deal will give $13Bn in food stamps, $25Bn for home renters and $80Bn in funding to help schools and universities.


GBPUSD

Much needed support for the US economy should be more bearish the US dollar and bullish equities. Market expectations had already been pricing in the new stimulus package, the pop in the US Dollar is likely "buy the rumour sell the fact".


As GBPUSD falls, there are two areas of support I'm interested in watching how price responds. The first is 1.3300 and second is 1.3200/3150 area. If there is bullish price action in these areas the long offers a good reward to risk trade back up towards 1.3500.


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