GBP/USD analysis: further gains expected on a break above 1.2550
|GBP/USD Current price: 1.2521
Pound's rally suffered a temporal interruption during London trading hours, but it was quickly reversed, with the GBP/USD pair closing the day around 1.2520, its highest settlement since mid December. The pair fell down to 1.2418, following news indicating that the UK's Supreme Court ruled against the government by an 8-3 margin in the Brexit case. This basically means that PM May will need the approval of the Houses before triggering the Art. 50 of the Lisbon treaty. The decision will likely result in a delay in the date of the beginning of the negotiations with the EU, as despite MPs have said that they will respect the will of the people, some opposition could be expected from Labour MPs and from the Scottish Nationalist members. Given that the news hardly affected the final decision of leaving the EU, and have only the potential of a couple of months´ delay, investors resumed buyers after the initial profit taking, moreover due to ongoing dollar's weakness. At this point, the rally could extend further, now that the price has seems to have settled above the 1.2500 level, although an extension beyond 1.2550 is required to confirm so, with scope then to retest December highs in the 1.2770 region. In the 4 hours chart, the price recovered quickly from a sharply bullish 20 SMA, whilst technical indicators are retreating modestly from near overbought levels, rather reflecting the ongoing limited volume than suggesting an upcoming downward move.
Support levels: 1.2480 1.2450 1.2415
Resistance levels: 1.2550 1.2590 1.2635
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