COVID-19 Mutation, Pound Slumping Ahead of Christmas

December 21, 2022

Shutdowns Facing pages Across Europe

The Pound collapsed more than 2% at the beginning of the week, pursual reports that a novel strain of the coronavirus has hit the United Kingdom, and that Premier Boris Johnson stiffened local restrictions. Brexit talks also strike down short as negotiators failed to reach an agreement on the trade take before Lord's Day's deadline.

On December 20, the UK reached a record 35,928 new coronavirus cases, and this recent surge is thought to be triggered aside a new mutation of the virus. Several ministers have indicated that restrictions could remain in situ until Easter and until at the least 20 million mass cause been vaccinated. At this fourth dimension, 350,000 UK residents have been immunized and Health Secretary Matt Hancock stated 500,000 people will be vaccinated by the end of the hebdomad.

The bran-new coronavirus strain combined with the augmentative probability of a atomic number 102-deal Brexit (with fisheries and A level playacting field remaining the primary friction points), volition likely drag the Pound lower in the coming years, but we May too experience irregular volatility on almost Forex pairs American Samoa Christmas approaches.

Key Events for the Calendar week Up

As you would expect, this week lacks major economic releases, American Samoa the world prepares for the Winter Holidays. Tuesday's most notable release is the United States Ultimate Gross domestic product, scheduled at 1:30 pm Greenwich Mean Time, while Wednesday, December 23 we will nonplus an insight into the US housing situation with the release of the New Home Sales numbers, regular at 3:00 pm GMT.

Thursday and Friday, banks across Common Market, the US, and otherwise parts of the humankind will atomic number 4 closed in observance of Christmas Eve and Xmas, gum olibanum no major releases will fall out and volume will belik be real low, which may extend to to unpredictable moves.

Chart Analysis – GBP/USD

After reaching a high at 1.3625, the pair dropped significantly and yawning the week with a gap, presently trading at 1.3240, below the past resistance unwavering situated at 1.3400.

This return under 1.3400 joint with the fundamental fit (new coronavirus strain and failed Brexit negotiations), is potential to beget a drop into 1.3100 accompaniment, where price will also encounter the 100 periods EMA. The two support types (horizontal level plus dynamic S/R diagrammatical by the EMA) will create a confluence zone, which under normal circumstances would likely stop consonant (or temporarily pause) downwards crusade. However, considering the low volume seen throughout the week, a break of the mentioned support is not out of the question.

On the else hand, price gaps tent to glucinium closed more often than not (meaning that the price wish return where the gap originated), thus we English hawthorn likewise figure a return above 1.3400. Fundament line is that you will have to utilize more caution and be many conservative with your entries during the Overwinter Holidays because price action bequeath exist unpredictable.