GBP/USD analysis: Brexit headlines overshadowed Fed

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3175

EU and UK authorities getting nowhere close to a Brexit deal.
Market players still hoping there won't be a hard landing.

The GBP/USD pair was on a wild ride this Wednesday, up and down as uncertainty about Brexit kept investors on their toes. The pair peaked at 1.3216 right after the Fed monetary policy announcement but trimmed gains after some second toughs to what the removal of "accommodative" to the statement meant. The Pound, however, is still struggling for direction, hovering around 1.3170. There were multiple comments from EU and UK authorities hitting the wires through the London session, with EU's Chief Negotiator Barnier who said: “working for an orderly Brexit and a new partnership that respects the UK’s sovereignty, as well as the founding principles of the EU, such as the integrity of the single market.” He later added that the EU wants no-deal plans to intensify, as policymakers are worried about the uncertainty surrounding Brexit. PM May later reiterated that the UK is not seeking for a partial membership of the single market, while Irish FM said that a disorderly could cost Ireland 3 or 3.5 GDP points over the years afterward. Also, UK chancellor Hammond has rushed forward the presentation of the annual budget to October 29th. Odds for a no-deal remain high, but some hopes of a last-minute agreement prevail. There are no macroeconomic releases scheduled in the UK for this Thursday, although BOE's Governor Carney is set to speak by London's close.

Technically, the pair is stuck to the 50% retracement of the 2016/18 rally, and the 4 hours chart shows that it managed to hold above a now mild positive 20 SMA. Technical indicators in the mentioned chart, are losing upward momentum within positive territory, somehow suggesting that speculative interest is not ready to take over the 1.3200 figure. Nevertheless, the pair posted a higher high and a higher low for a third consecutive day, which means that sellers are not interested at the time being. Brexit headlines will likely continue to set the tone for Sterling over the upcoming days.

Support levels: 1.3125 1.3090 1.3055

Resistance levels: 1.3215 1.3260 1.3300

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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