GBP/USD analysis: Brexit outcome will have the final saying

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3041

UK Manufacturing PMI beat expectations, Construction growth up next.
Positive Brexit-related headlines were not enough to make Sterling gain ground.

The GBP/USD pair hit a daily high of 1.3115 backed by headlines indicating that the UK is willing to accept some checks in the Irish sea, a way to solve the Irish border issue and get a Brexit deal, with Sterling also supported by an upbeat UK Markit Manufacturing PMI up in September to 53.8, above the market's forecast of 52.5 and the previous 53.0, this last upwardly revised from a previous estimate of 52.8. The Pound, however, was unable to hold on to gains, having spent most of the day trading a handful of pips above Friday's close of 1.3028. The UK will release this Tuesday the Nationwide Housing Price Index for September, ad more relevant the Construction PMI, this last expected at 52.5 from the previous 52.9.

The 4 hours chart shows that dismissing the intraday spike, the pair spent the day confined to a tight 20 pips' range, unable to regain ground above a flat 200 EMA and while the 20 SMA gains bearish strength above the larger one. Technical indicators in the mentioned chart have recovered modestly but remain in negative territory, with the RSI already turning south at currently at 34, which leans the scale toward the downside. Anyway, the absence of a relevant directional breakout is directly linked to uncertainty surrounding Brexit, as, despite the positive headlines, the market would need now an official announcement from authorities to actually rush to price it in.

Support levels: 1.3000 1.2970 1.2945

Resistance levels: 1.3065 1.3100 1.3140

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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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