GBP/USD analysis: Brexit hopes revived
|GBP/USD Current price: 1.3140
- Irish border issues narrowing according to people familiar with the matter.
- The UK to offer multiple macroeconomic readings this Wednesday.
The Pound got a nice boost mid-US session from headlines suggesting the EU and the UK have moved further in their way to clinching a Brexit deal. According to diplomats familiar with the matter, both economies have narrowed the gap on the Ireland border issue, but some differences remain. Also, that an agreement on the future trade relationship could be done by November, while the divorce terms could be out next Monday. The GBP/USD pair soared to 1.3148, holding nearby after UK's Brexit Minister Raab comments post a parliamentary discussion, less encouraging that the early headlines, as Raab said that the UK government is still preparing for a possible no-deal Brexit, although he added that the prognosis for reaching a deal is good. He repeated May's words that they won't accept anything that threatens the constitutional integrity of UK. The UK will release this Wednesday Industrial and Manufacturing Production data for August, and the GDP estimate and trade balance for the same month.
Meanwhile, the 4 hours chart for the pair shows that it found support around a flat 200 EMA, now developing also above a bullish 20 SMA, while technical indicators bounced from their mid-lines, holding below previous monthly highs despite the price reached a fresh one. The pair is still developing below the 50% retracement of the 2016/18 rally at 1.3170, a major static resistance level that needs to be cleared for a more sustainable recovery ahead. Seems unlikely, however, that the pair could begin a clear directional move with a Brexit deal still pending.
Support levels: 1.3040 1.3000 1.2970
Resistance levels: 1.3100 1.3130 1.3175
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