GBP/USD Analysis: Uncertainty or relief? Action granted anyway
|GBP/USD Current Price: 1.2974
- UK PM Johnson was forced by Parliament to ask for a Brexit-delay.
- EU Donald Tusk to present the extension request to the EU27 these days.
- GBP/USD may seesaw at the weekly opening, although the bullish potential remains intact.
Hopes that the UK will avoid a hard-Brexit kept the Pound rallying against all of its major rivals by the end of last week, with GBP/USD finishing it a handful of pips below the critical 1.3000 level. The UK Parliament has met Saturday and voted in favor of a Letwin amendment, ahead of the Meaningful Vote on PM Johnson’s latest agreement with the EU. The amendment forced Johnson to write a letter to the EU and ask for a Brexit delay, which he finally did late Saturday. The Prime Minister still attempts to leave the Union by the end of October or shortly after.
On Sunday, Donald Tusk, the President of the European Council, tweeted: “The extension request has just arrived. I will now start consulting EU leaders on how to react.” The market now needs to know whether the EU will grant the delay, and what and how the UK Parliament will vote next. The news, which were initially perceived as negative, could, on the contrary, lift Sterling on relief. At the same time, a Meaningful Vote is likely in the next few days. The Parliament is set to meet this Monday, although it’s unclear whether they will discuss the Brexit bill.
GBP/USD short-term technical outlook
The GBP/USD pair has settled at levels last seen in May this year, and offers a firmly bullish stance in its daily chart, as it surpassed all of its moving averages for the first time in five months. Also, technical indicators in the mentioned chart maintain their bullish slopes, despite being in extreme overbought territory. Shorter-term, and according to the 4-hour chart, an upside extension is also favored, as a bullish 20 SMA leads the way north by providing intraday dynamic support, currently at 1.2830. The Momentum indicator has eased within positive levels, but the RSI resumed its advance within overbought levels.
Support levels: 1.2930 1.2880 1.2825
Resistance levels: 1.2995 1.3030 1.3085
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