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Market Updates

06 Jan. 2021



After years of political vitriol and turmoil, the cable bolstered to a nine-months high reaching on 31st December 2020 at $1.3703 when the United Kingdom clinched a last-minute Brexit trade deal agreement, printing rules for fishing and agriculture.


The frenzied gyrations of the Brexit crisis dominated European affairs for the last five years, with Sterling sinking to $1.1450 2016 low, haunted the sterling markets and tarnished the United Kingdom’s reputation as a confident pillar of Western economic and political stability.


The cable now wrestles idiosyncratically with Covid-19 vaccine optimism and Brexit divorce treaty hope on the front foot, vis-à-vis speculation of Bank of England rate cut, third lockdown conundrums and an escalating economic malaise.


GBP/USD could lure in dichotomous ways after the United Kingdom ended de facto membership to the European Union last Thursday. Recent price action raises the scope for a larger bullish bias to $1.60 as the pair emanates a fifth wave extension as per Elliott Wave lexicon.


Bulls have far remained very responsive since March 2020. If the pair remains above Wave (4) at $1.3187, impulse Wave (5) formation above support at $1.3703 could be anticipated with little fanfare, with target neighbouring zone $1.4590 to $1.5456.


Failure to propel above support at $1.2672 of 23rd September 2020 low will catalyse a jolting collapse and invalidate the technical analysis count. The trendline stemming from March 2020 on the daily chart would likely come into play as support on a move lower.


Disclaimer: This communication is provided for information and discussion purposes only. Unless otherwise indicated, it does not constitute an offer or recommendation to purchase or sell any financial instruments or other products. AfrAsia Bank does not guarantee or warrant the accuracy, reliability, completeness of the information in this publication.