GBP/USD: There is room to the upside once markets take a breather from US elections

GBP/USD has been on the back foot amid US elections uncertainty but sterling has reasons to rise once markets take a break from the elections amid progress in Brexit talks and a tentative flattening of the coronavirus curve, FXStreet’s Analyst Yohay Elam reports.

Key quotes

“The long campaign is turning into a long count – and perhaps a recount. The world is watching Georgia, Nevada, Wisconsin, Michigan, Pennsylvania, and perhaps additional states for an answer – which may take long hours. The longer the uncertainty continues, the better for the safe-haven dollar.” 

“The EU and the UK have reported progress in the recent round of talks and also agreed on a new one. Brussels and London are both quiet – refraining from accusations – and that is a positive sign for the pound.” 

“Another reason for sterling strength is a tentative sign that Britain is flattering the curve of cases. While hospitalization may continue rising, there are higher chances that the upcoming lockdown is not extended. Prime Minister Boris Johnson's new shuttering begins on Thursday.  The encouraging development could also help keep the Bank of England from adding new stimulus, yet that remains an open question.”

“Pound/dollar is benefiting from upside momentum on the 4-hour chart and has surpassed the 50, 100, and 200 Simple Moving Averages. These are all bullish signs.”