GBP/USD Analysis: Pound rallied on decreasing chances of a hard-Brexit

GBP/USD Current Price: 1.2325

• Jo Johnson, UK PM’s brother, resigned amid being “torn between family loyalty and the national interest.”
• GBP/USD stable holding on to gains above 1.2300, short-term overbought.  

The Sterling Pound continued to outperform its major rivals, surging against the greenback to 1.2353, its highest in over a month. UK PM Johnson suffered a major setback in Parliament late Wednesday, as MPs passed a bill to delay Brexit until January 2020 in the case the Prime Minister can’t achieve a new deal before October’s deadline. Also, MPs rejected Johnson’s motion for a general election. Early Thursday, Jo Johnson, the PM brother, resigned from government and parliament, claiming to be “torn between family loyalty and the national interest.” UK PM Johnson has no majority in the House of Commons after losing three critical votes. In this scenario, the chances of a hard-Brexit keep sliding. There were no relevant macroeconomic releases in the UK, and the calendar will remain scarce on Friday.

GBP/USD short-term technical outlook

The GBP/USD pair is currently trading in the 1.2310/20 price zone, consolidating its latest gains and resilient to broad dollar’s strength. The 4 hours chart shows that the pair has extended its advance beyond all of its moving averages, with the 20 SMA accelerating north but still below the larger ones. Technical indicators in the mentioned chart, lost strength upward after reaching extreme readings, now hovering in overbought levels, all of which maintain the risk skewed to the upside. As long as chances are against a hard-Brexit, the risk will remain skewed to the upside, with a downside corrective movement toward 1.2255 likely but not enough to revert the dominant positive tone.

Support levels: 1.2295 1.2255 1.2210

Resistance levels: 1.2350 1.2390 1.2440

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