GBP/USD analysis: relief limits the downside, Brexit impasse caps advances

Valeria Bednarik FXStreet

GBP/USD Current Price: 1.3080

Labour leader Corbyn blamed the 'collapsing' government for the lack of progress.
UK to release latest employment data next Thursday.

Dollar's broad weakness helped GBP/USD reach 1.3132 Friday, its highest for the week, although, once again, it was unable to retain the 1.3100 mark, ending the week barely up below the figure. This past week, the EU granted the UK a Brexit flexible extension up to October 31, which means that the UK can leave earlier if a deal is agreed within the kingdom, something quite unlikely, as the Parliament had already rejected May's deal three times. Nor May, neither the EU want to reopen negotiations to change the withdrawal agreement, while lawmakers won't accept May's deal. So far, the only thing all parts involved agreed on, is to avoid a no-deal Brexit, which provided some temporal relieve to the Sterling. But the critical issue that prevents reaching an agreement, the Irish backstop, remains unsolved. Meanwhile, cross-party talks between PM May and opposition leader Corbyn aimed to break the Brexit impasse, headed nowhere, with Corbyn accusing May of sticking to her 'red lines,' and showing no real compromise. There are no macroeconomic releases scheduled in the UK this Monday.

The GBP/USD pair has been consolidating within a well-limited range this last week, with speculative interest rushing to take profits out of the table once it reaches the 1.3100 region. In the daily chart, Friday's rally met sellers around a daily descendant trend line coming from March high at 1.3381, also the 20 DMA, gaining bearish strength at around 1.3125. Technical indicators in the mentioned chart remain within negative levels, the Momentum aiming modestly higher an the RSI flat at around 47, offering a neutral-to-bearish stance. Shorter term, and according to the 4 hours chart, the price settled below a directionless 200 EMA and around an also flat 20 SMA, while technical indicators head south around their mid-lines, skewing the risk toward the upside.

Support levels: 1.3050 1.3000 1.2965

Resistance levels: 1.3125 1.3160 1.3195

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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