GBP/USD Analysis: all eyes now on Parliament

Valeria Bednarik FXStreet

GBP/USD Current Price: 1.2880

The EU and the UK agreed on a new withdrawal deal but lacks DUP’s support.
The UK Parliament will have an extraordinary session next Saturday.
GBP/USD holding on to gains above 1.2800, market willing to believe in a deal.

The GBP/USD pair soared to 1.2989, adding roughly 200 pips on news indicating that an agreement was reached between EU´s and UK’s representatives, that would be discussed within the EU Summit. The initial headlines suggested that the Northern Irish Democratic Unionist Party (DUP) supported the deal, but the party later formally stated that it would vote against this Brexit deal. Furthermore, opposition Labour leader, Jeremy Corbyn, said that this accord is worse than the previous one. Chances that the document will pass the Parliament decreased sharply, resulting in the GBP/USD pair plummeting to daily lows in the 1.2770 region. The UK Parliament is set to convene for an extraordinary session on Saturday, and discuss the newly withdrawal agreement and the political declaration approved by the EU27. Chances of a general election began sounding back loud. The pair recovered on broad dollar’s weakness, settling around 1.2880.

In the meantime, UK Retail Sales came in unchanged as expected in September, rising by 3.1% when compared to a year earlier. Core sales ex-fuel, however, were better than anticipated, up by 0.2% MoM and by 3.0% YoY. There’re no macroeconomic releases scheduled in the UK this Friday.

GBP/USD short-term technical outlook

The GBP/USD pair maintains the bullish bias, both short and longer term, as it’s trading at levels last seen mid-May. The positive momentum is exclusively based on Brexit hopes, and technical readings support it, although macro headlines could easily trigger a U-turn. At the time being, however, the risk is skewed to the upside, according to the 4 hours chart, as the pair continues finding support in a bullish 20 SMA, currently at 1.2750. Technical indicators have resumed their advances, the Momentum within positive levels, and the RSI currently at 75. It seems unlikely the pair could trigger a relevant breakout during the upcoming session, as the market will likely wait for Parliament’s decision before deciding the next directional move.

Support levels: 1.2830 1.2790 1.2755

Resistance levels: 1.2910 1.2950 1.2990

View Live Chart for the GBP/USD

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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