GBP/USD Analysis: Brexit hopes boost the Pound

Valeria Bednarik FXStreet

GBP/USD Current Price: 1.2258

German Chancellor Merkel said that a solution to the Irish backstop could be found within 30 days.
French President Macron insisted on keeping the Withdrawal Agreement as it is.
GBP/USD to retain the bullish tone as long as above 1.2220.

The GBP/USD pair up roared to hit a 3-week high of 1.2272 to settle by the end of the day at around 1.2250, as German Chancellor Angela Merkel said that they could work on finding a backstop solution by October 31. The encouraging headline overshadowed discouraging comments from French President Macron and discouraging data. UK PM Boris Johnson met Macron, who in polite terms reiterated that he respects the UK’s decision to leave the EU, but he also needs to stand for the integrity of the single market. About the Irish backstop, Macron said that is the “protector of stability in Ireland” and therefore can’t be touched, adding that they won’t find a new Withdrawal Agreement in the next month. The UK saw the release of the CBI Distributive Trade Survey on realized sales, which collapsed to -49%. The UK won’t release any relevant figure this Friday, with the focus on comments from central bankers within the Jackson Hole Symposium.

GBP/USD short-term technical outlook

The GBP/USD pair holding on to gains, trading above the 38.2% retracement of the latest daily decline at around 1.2220 now the immediate support. In the 4 hours chart, the pair has soared past its 20 and 100 SMA, while the 200 SMA maintains a bearish slope, now converging with the 50% retracement of the same decline at around 1.2385 reinforcing the static resistance level. Technical indicators in the mentioned chart have lost strength upward after reaching overbought levels. A key inflection point comes at 1.2350, the 61.8% retracement of the same daily slump.

Support levels: 1.2220 1.2175 1.2120

Resistance levels: 1.2285 1.2310 1.2350

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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