GBP/USD analysis: risk leaned toward the downside as Brexit deal is not a trade deal

GBP/USD Current price: 1.3379

• Brexit negotiations' breakout won't guarantee a trade deal for March 2019.
• BOE expected to maintain the status quo, but inflation could trigger a more optimistic stance.

The GBP/USD pair soared to 1.3520 early Friday, following headlines indicating that the UK and the EU finally clinched a deal on the Brexit divorce conditions, enabling negotiations to move to the next phase and discuss post-Brexit trade and a transition period. However, and "according to people familiar with the matter," a trade deal between both economies won't be ready until March 2019, meaning after Brexit actually takes place. Bulls took the hit and rushed to take profits out of the table, resulting in the pair ending the week at 1.3377. The UK will report November's inflation this Tuesday, ahead of BOE's monetary policy meeting on Thursday. Carney & Co. are largely expected to maintain the status quo amid ongoing political uncertainty, yet a more optimistic stance could come, particularly if inflation eases, which will back policymakers' wish to move into normalization. From a technical point of view, the pair is at risk of easing further, albeit additional confirmations are required, as in the daily chart, the pair has bounced a couple of times from a bullish 20 DMA, which now stands a couple of pips above the 61.8% retracement of the latest bullish run at 1.3345, the immediate support.  Indicators in the same chart, have turned sharply lower, but so far holding above their mid-lines. Shorter term, and according to the 4 hours chart,  the risk is towards the downside, yet also without confirming it, as the pair settled below its 20 SMA, now gaining downward traction, while technical indicators turned lower around their mid-lines.

Support levels: 1.3345 1.3300 1.3260

Resistance levels: 1.3420 1.3460 1.3500

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