GBP/USD Analysis: all eyes now on Parliament
|GBP/USD Current Price: 1.2880
- The EU and the UK agreed on a new withdrawal deal but lacks DUP’s support.
- The UK Parliament will have an extraordinary session next Saturday.
- GBP/USD holding on to gains above 1.2800, market willing to believe in a deal.
The GBP/USD pair soared to 1.2989, adding roughly 200 pips on news indicating that an agreement was reached between EU´s and UK’s representatives, that would be discussed within the EU Summit. The initial headlines suggested that the Northern Irish Democratic Unionist Party (DUP) supported the deal, but the party later formally stated that it would vote against this Brexit deal. Furthermore, opposition Labour leader, Jeremy Corbyn, said that this accord is worse than the previous one. Chances that the document will pass the Parliament decreased sharply, resulting in the GBP/USD pair plummeting to daily lows in the 1.2770 region. The UK Parliament is set to convene for an extraordinary session on Saturday, and discuss the newly withdrawal agreement and the political declaration approved by the EU27. Chances of a general election began sounding back loud. The pair recovered on broad dollar’s weakness, settling around 1.2880.
In the meantime, UK Retail Sales came in unchanged as expected in September, rising by 3.1% when compared to a year earlier. Core sales ex-fuel, however, were better than anticipated, up by 0.2% MoM and by 3.0% YoY. There’re no macroeconomic releases scheduled in the UK this Friday.
GBP/USD short-term technical outlook
The GBP/USD pair maintains the bullish bias, both short and longer term, as it’s trading at levels last seen mid-May. The positive momentum is exclusively based on Brexit hopes, and technical readings support it, although macro headlines could easily trigger a U-turn. At the time being, however, the risk is skewed to the upside, according to the 4 hours chart, as the pair continues finding support in a bullish 20 SMA, currently at 1.2750. Technical indicators have resumed their advances, the Momentum within positive levels, and the RSI currently at 75. It seems unlikely the pair could trigger a relevant breakout during the upcoming session, as the market will likely wait for Parliament’s decision before deciding the next directional move.
Support levels: 1.2830 1.2790 1.2755
Resistance levels: 1.2910 1.2950 1.2990
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.