GBP/USD analysis: Brexit hopes boosted the Pound

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3118

EU to offer the UK this Wednesday a "super-charged" free-trade deal.
GBP/USD facing major resistance in the 1.3170 region, the 50% retracement of the 2016/18 rally.

The GBP/USD pair jumped to 1.3122, its weekly high last Friday and closed not far below the level, on headlines indicating that the EU is willing to offer the UK a "super-charged" free-trade deal. According to the report which cited EU officials, Brussels' proposal will be presented to the UK news Wednesday. Not far detail was known, but the fact that if covers between 30 to 40% of UK PM May's demands. Seems unlikely that UK authorities will give up to most of the Chequers' plan to agree with this upcoming idea, but in the meantime, market players believe that both parts will work hard to avoid a no-deal. The Pound held on to gains above the 1.3000 level after the US employment report fell short of impressing dollar bulls.

The pair bottomed for the week at 1.2921 and closed it up some 200 pips above this last, and despite closing with gains, it settled below a major Fibonacci resistance at 1.3170 and established a third consecutive lower low, a sign that the pair is far from bullish. In the daily chart, the price recovered up to a flat 20 DMA, while technical indicators head higher around their midlines, living a neutral technical stance. In the 4 hours chart, the pair recovered above its 20 SMA and 200 EMA, with the shortest gaining upward traction, while technical indicators near overbought readings before losing upward strength, holding anyway nearby, supporting an upward extension up to the mentioned resistance. A strong static support comes at 1.3060, with a break below the level putting the pair on the bearish path short-term.

Support levels: 1.3060 1.3015 1.2970

Resistance levels: 1.3130 1.3175 1.3210

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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