GBP/USD analysis: Macron supports special trade deal on Brexit

US Government shutdown and comments from Macron to lift the Pound.
UK employment data next Wednesday, main British event of the week.

Valeria Bednarik FXStreet

The GBP/USD pair closed Friday lower at 1.3842, but still up for a fifth consecutive week, and at levels last seen in June 2016, when the pair shed over 1000 pips in a day as a result of the Brexit referendum's outcome. The pair traded as high as 1.3944 before easing ahead of the weekend, but would likely start the week with a strong note, as French President, Emmanuel Macron, spoke in behalf of the UK during the weekend, saying that, despite the kingdom can't "cherry-pick" the elements within a future trade deal with the EU, it would surely need a special one, somewhere between the single market and a trade agreement. He also added that the referendum was a mistake and that he would like to see Britain returning to the EU. This week, attention will center on Wednesday, December employment's figures in the UK, with investors focusing on the relation between wages' growth and inflation. In the daily chart, the pair remains well above a bullish 20 SMA, while technical indicators have lost their upward strength, with the Momentum consolidating within positive territory and the RSI retreating within overbought territory, limiting the upward potential but far enough to confirm a downward movement ahead. In the 4 hours chart, however, technical indicators head sharply lower, aiming to cross their mid-lines, while the pair settled around its 20 SMA. Nevertheless, the pair could gap higher at the weekly opening on dollar's weakness, following weekend news announcing a US government shutdown.

Support levels: 1.3800 1.3770 1.3735

Resistance levels: 1.3865 1.3900 1.3945

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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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