GBP/USD Analysis: it’s all about a Brexit deal
|GBP/USD Current Price: 1.2830
- Mounting hopes that the UK and the EU will reach a Brexit agreement boosted Sterling.
- UK inflation remained at its lowest since 2016 in September, backing consumer spending.
- GBP/USD technically bullish, but it’s all about whether politicians could seal a Brexit deal.
The GBP/USD pair has rallied to a fresh five-month high of 1.2877 as hopes kept boosting the Pound. Following several market talks and rumors, the latest catalyst came from French President Macron, who said that a Brexit agreement was being finalized, reinforced by comments from German Chancellor Angela Merkel, who said that Brexit talks are now in the “final meters.”
The UK released September inflation data this Wednesday, which missed the market’s expectations but held at August levels, with the yearly CPI at 1.7% and monthly one at 0.1%. Core annual inflation came in at 1.7% as expected, slightly better than the previous 1.5%. With inflation at its lowest in three years, consumer spending got underpinned. This Thursday, the UK will release September Retail Sales, seen up by 3.2% YoY. However, Pound’s direction will solely depend on Brexit-related headlines and whether or not the UK and the EU reach a new deal.
GBP/USD short-term technical outlook
The GBP/USD pair is holding on to most of its intraday gains, well above the 1.2800 level heading into the Asian opening. The pair is technically bullish according to the 4 hours chart, as the 20 SMA has advanced over 400 pips above the larger ones, reflecting the strong upward momentum from these last days. Furthermore, the pair met buyers on a test of the mentioned moving average. Technical indicators have lost strength upward, with the Momentum now flat at daily highs and the RSI easing but at 75, far from suggesting the pair has reached its top.
Support levels: 1.2790 1.2755 1.2710
Resistance levels: 1.2865 1.2910 1.2950
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