GBP/USD Analysis: Brexit optimism keeps bulls in the drivers’ seat

Valeria Bednarik FXStreet

GBP/USD Current Price: 1.2502

Fading odds for a hard-Brexit continue to underpin the Pound.
UK PM Johnson working on securing a deal in the next EU Summit.
GBP/USD set to extend its advance once beyond 1.2515, the immediate resistance.

The GBP/USD pair has advanced for a second consecutive week, reaching Friday 1.2505, its highest since last July, and settling not far below this last. The Pound rallied on renewed hopes the UK may get a way to modify the Irish backstop, despite on Thursday, EU’s top negotiator Michel Barnier said that there are no grounds for reopening formal negotiations. Optimism was underpinned by a leaked report suggesting that the EU is prepared to grant another extension on Brexit to avoid a no-deal. News indicating that UK PM Boris Johnson is planning to secure a deal with the EU at the EU summing in Brussels mid-October, adds to signs that the government is moving away from a hard-Brexit. At the same time, Johnson is determined to reject any deadline extension. Early this week, the UK will release the September Rightmove House Price Index, nothing that can severely affect Sterling’s trend.

GBP/USD short-term technical outlook

The GBP/USD pair is bullish according to technical readings in the daily chart, having advanced sharply above a bullish 20 DMA, and settling a couple of pips below the 100 DMA, offering a dynamic resistance at around 1.2515. Technical indicators maintain their upward slopes at monthly highs and near overbought readings, supporting a continuation of the ongoing rally. In the shorter term, and according to the 4 hours chart, the pair is also bullish as technical indicators continue advancing despite being well into overbought levels, while the price settled well above all of its moving averages.

Support levels: 1.2425 1.2380 1.2335

Resistance levels: 1.2515 1.2560 1.2600

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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