GBP/USD analysis: Brexit uncertainty to keep limiting the upside

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2751

UK Markit Manufacturing PMI foreseen at 52.5 in December from 53.1 in November.
UK PM May pledged to "turn a corner" if her Brexit deal passes the Parliament.

The Sterling was among the best performers against the greenback in the last trading day of the year, surging to 1.2814, to finally settle in its comfort zone around 1.2750. The Pound surged on comments by Foreign Minister Hunt, who said that May's deal could pass the Parliament if the EU provides clarification that the Irish backstop will be temporal. However, EU Juncker said Monday that the UK needs to "get its act together," as is not up to the EU to resolve British problems. In her new year message, PM May pledged to "turn a corner" if her deal gets approved, saying that once they solve this, they could focus on more relevant UK issues. The kingdom's December Markit Manufacturing PMI will be out this Wednesday, expected at 52.5 vs. 53.1 in November.

The 4 hours chart for the pair shows that the pair broke and held above the 200 EMA, for the first time above it since early November. In the same chart, the 20 SMA turned modestly higher, some 200 pips below the current level, while technical indicators barely retreated from overbought levels before stabilizing, somehow suggesting a limited downward potential. Nevertheless, Brexit uncertainty will play against the Pound, despite broad dollar's weakness, and advances will likely be seen as selling opportunities.

Support levels: 1.2710 1.2665 1.2630

Resistance levels: 1.2785 1.2820 1.2850

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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