GBP/USD Current Price: 1.3209
- EU offered a short Brexit extension to the UK that lawmakers will now have to discuss.
- Sterling volatility is set to continue with contradictory headlines flooding the news.
The Pound moved against the tide Friday, posting a nice recovering against the greenback, with the GBP/USD pair finishing the day a few pips above the 1.3200 level, and trimming most of its weekly losses. The chaos in the UK came to a temporal pause as the EU has agreed on an extension on Brexit, initially to April 12. This date will be conditioned to the UK Parliament approving the withdrawal agreement this week. If the deal gets approved these days, then the UK could take up to May 22 to ratify the agreement. The UK will have now to decide on the extension offered, and if it wants a longer extension, then it will have to participate in the EU parliament elections. So, PM May won't renegotiate the deal, the UK Parliament won't approve it as it is, and the EU is unwilling to extend negotiations indefinitely, a stalemate situation that doesn't look good. The Pound surge, as speculative interest, can't imagine the UK will crash out of the Union without a deal. In the meantime, there's an online petition made to the UK Parliament to revoke Art. 50 and remain in the EU that has reached roughly 5 million signatures so far. There are no defined dates on Parliamentary meeting this week but seems once again, UK lawmakers will take center stage.
The GBP/USD pair has been trading in an ascending channel ever since bottoming at 1.2422 early January, clear in the daily chart. It briefly pierced the bottom of the figure last week before recovering, a sign that bulls are not ready to give up. Also, volatility around the Sterling has been extremely high and will likely remain so on the back of Brexit chaos. In the daily chart, the pair settled a handful of pips above a bullish 20 DMA after testing a directionless 200 EMA, this last, usually a line in the sand when it comes to defining the trend. Technical indicators turned back north, but at this point stand at neutral levels, not enough to suggest further gains ahead but reflecting the limited downward potential. In the 4 hours chart, the technical picture is quite alike, with the pair above its moving averages but with the 20 SMA maintaining a downward slope, and technical indicators having surpassed their midlines, but lacking momentum enough to confirm further gains ahead.
Support levels: 1.3160 1.3120 1.3075
Resistance levels: 1.3230 1.3270 1.3315
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