GBP/USD analysis: at fresh 2-week highs on Brexit hopes and dollar's sell-off

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3059

UK's PM May and EU's Juncker to meet this Wednesday.
UK Parliament could take control of Brexit if PM May can't pass a deal.

The Pound soared past 1.3000 against the dollar reaching 1.3066, its highest in over two weeks, as renewed Brexit hopes were combined with broad dollar's weakness in the last trading session of the day. During the London morning, junior business minister Richard Harrington said that the UK Parliament would take control of Brexit if PM May can't pass a deal next February 27. PM May´s spokesman said that the PM is still looking to reopen the withdrawal agreement, with no signs that EU officials are willing to do so. At the same time, the UK Environment Secretary Gove said that tariffs for a no-deal Brexit would be announced shortly. The UK released employment data earlier today, with the unemployment rate steady at 4.0% in the three months to December, and average hourly earnings increasing by 3.4% in the same period, both excluding and including bonuses compared with a year earlier. PM May and EU's Juncker will have a meeting this Wednesday in an attempt to break the stalemate over the Irish border.

The pair is now above the 61.8% retracement of the 1.3217/1.2772 slide at around 1.3050, up over 100 pips in the American session, resulting in technical indicators reaching extreme overbought readings in the 4 hours chart. Nevertheless, both the Momentum and the RSI maintain their strong bullish slopes, while the price is far above a now bullish 20 SMA and a directionless 200 EMA, all of which favors an upward extension ahead. The risk, however, is as always uncertainty surrounding Brexit as failed talks between May and Juncker could result in the pair giving back all of its recent gains.

Support levels: 1.3050 1.3010 1.2970

Resistance levels: 1.3090 1.3140 1.3185

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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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