GBP/USD analysis: running against the clock, but far from a solution on Irish backstop

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3045

Irish backstop still the main source of concern for Brexit negotiators.
Despite no actual progress, market players seem confident on a deal.

The GBP/USD pair gapped higher at the weekly opening amid mounting speculation of a possible Brexit deal to be out this week. Headlines and comments from authorities involved in the negotiations were out all throughout the day, with some even suggesting Brexit Secretary Raab could resign, quickly denied. The only fact by the end of the day is that the Irish border issue is still unsolved and that the run against the ticking bomb of a no-deal Brexit is coming to an end without a winner. The pair filled the gap after the release of the UK October Markit Services PMI, which fell to 52.2, its lowest in seven months, missing the market's forecast of 53.3. Early Tuesday, the UK will see the release of the BRC like-for-like sales for October, previously at -0.2%. Brexit-related headlines will keep on triggering nervous spikes both side of the board.

From a technical point of view, the Pound is relatively strong, as seems speculative interest is willing to believe a deal will be achieved. The 4 hours chart shows that the pair spent the day consolidating above a flat 200 EMA, while the 20 SMA keeps advancing below the larger one, now catching up with the price after last week's run. The Momentum indicator in the mentioned chart has spent the day easing within positive ground but the RSI advanced modestly, holding near overbought readings, indicating that bulls retain control despite being unwilling to push the pair higher.

Support levels: 1.3020 1.2980 1.2935

Resistance levels: 1.3085 1.3130 1.3180

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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