GBP/USD analysis: agreement on softer Brexit pushed the Pound higher

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3286

UK Cabinet came to an agreement on a softer Brexit strategy on future trade relationship.
USD weakness added to GBP/USD short-term bullish case, 1.3310 region now key.

The GBP/USD pair closed the week with gains at 1.3286, just a handful of pips below the previous week's high, with the Pound finding demand on the back of better-than-expected UK data released through the week and a softer dollar, dumped on fears that the trade war will end up hurting US economic growth. Late Friday, news indicated that the UK Cabinet agreed with PM May's plan about the future trade relationship with the EU, an agreement that contemplates creating a free trade area for industrial and agricultural goods, "regulatory flexibility" for trade in services, and a "mobility framework" which will ensure citizens from both regions can continue to travel to each other's territories and apply for study and work. Boris Johnson strongly disagreed with the plan, saying that it would leave the UK as a "vassal state," among other strong comments. Indeed, the proposal from Mrs. May points for a softer-Brexit that needs yet the approval of the EU officers. The pair has been unable to clearly advance beyond 1.3300 for the last three weeks, and bulls could feel encouraged on a break above the level, although the pair should sustain gains beyond 1.3450 to actually enter bullish territory. Readings in the daily chart favor additional gains, as the pair ended well above a mild bearish 20 SMA, while technical indicators head north within positive territory, at their highest since last April. In the 4 hours chart, a bullish 20 SMA keeps leading the way higher, attracting buyers on intraday pullbacks, while technical indicators also maintain their bullish slopes, but below this month highs. The 200 EMA in this last time frame comes at 1.3310, while a relevant high is located at 1.3314, making of the 1.3310 an immediate and strong resistance.

Support levels: 1.3250 1.3210 1.3170

Resistance levels: 1.3315 1.3350 1.3390

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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