GBP/USD analysis: Brexit hopes keep boosting the Pound

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3212

EU's Negotiator Barnier made quite encouraging comments about a possible deal.
UK data mixed, with disappointing trade data and GDP growth.

The Pound soared against all of its major rivals on comments from EU's Chief Negotiator Barnier, indicating that a Brexit deal is closer. The GBP/USD pair jumped to 1.3209, its highest since September 26, after Barnier claimed that near the 85% of the Brexit deal has been agreed, although adding that they still need to agree on the Irish border issue. Furthermore, he said that the EU found many points of convergence with UK PM May's Chequers plan. The Sterling is all about Brexit these days, more clear today as the currency appreciated despite mixed local data released at the beginning of the day. Industrial and Manufacturing Production were both up by 1.3% YoY in August, but the trade deficit in the same month increased to £-1.274B, while the monthly GDP growth stayed pat, down from a previous 0.4% advance. On Thursday, the UK will release the BOE Credit Conditions Survey, while BOE's Governor Carney will participate in a panel discussion about the role of regulators and central banks in finances.

The GBP/USD pair seems comfortable above the 50% retracement of the 2016/18 rally, now turned into support at around 1.3175. The pair has been unable to sustain gains for long above the level in the last two months, so caution is recommended, although further positive Brexit-related headlines should keep it on the bullish side. The short-term technical picture favors additional gains, moreover, if the pair breaks above 1.3215, Sep 26 high, as, in the 4 hours chart, technical indicators maintain their upward slopes near overbought readings, while the price advanced well above a firmly bullish 20 SMA.

Support levels: 1.3175 1.3130 1.2990

Resistance levels: 1.3215 1.3245 1.3290

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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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