Looking at GBP index, recent sharp fall went all the way down from 130 to 111. Followed by a decent pullback. Now, as the price formed a falling channel under 61.8% Fibonacci, this could be the decisive level for GBP’s direction for the following days.
(1 Hour chart)
A break of the channel and 61.8% level would signal potential for GBP to go higher. On daily chart, there is resistance, however, in the form of death-cross of 50SMA and 200SMA, and the a 127.50 resistance area.
Alternatively, if we reject and break to the downside from the 61.8%, that would imply that the weakness of the GBP is not over and creates a selling potential.
The struggle of the lockdown in UK and other countries and unknown timelines for virus containment create an unknown factor that we can’t anticipate, so fundamentals can change at any moment. Recent bullish days in the indices do not reflect the real state of the economy, which is stagnant, since consumers are locked at home. You can’t have a consumer economy operate without a consumer after all. So, while we see FTSE inching higher, the state of the UK economy remains weak at best, which could put pressure on sterling.
Good Luck and Stay Healthy!