Oct 27 (Reuters) - As winter draws in, the UK faces several major challenges, which will determine the direction of sterling's next move. Market positioning and charts suggest that the trend will be your friend.
The coronavirus continues to expand in the UK as Brexit negotiations drag on, though a bare-bones deal is expected . If the U.S. opinion polls are correct, and Democratic presidential challenger Joe Biden wins the election, the UK government will lose an ideological friend in Donald Trump, making a trade deal more difficult .
Regardless of how these factors play out, the nuts and bolts of leaving the European Union on Dec 31 will cause great disruption to UK businesses, as they adapt to a significant increase in paperwork and new trade rules with Europe, while COVID-19 swirls .
Fundamentals suggest the downside is the weak one for sterling, unless there is a truly comprehensive Brexit deal, which is unlikely. Positioning is neutral based on IMM data, so not a major driver.
Technically GBP/USD and EUR/GBP are around the middle of their Q3 ranges with daily and weekly moving averages showing conflicting signals, which is normal in a consolidating market, providing no real bias. Thus when a move develops, there is little reason to fight it, as key events unfold.
For more click on FXBUZ
gbp oct 27https://tmsnrt.rs/35E6qg2
(Andrew Spencer is a Reuters market analyst. The views expressed are his own)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.