GBP/USD analysis: senseless Brexit rhetoric continues

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3191

Comments from EU and UK authorities keep Pound's buyers on their toes.
Solid UK wage growth helped GBP/USD to reach 1.3235 daily high.

Hopes for a Brexit deal kept the Pound on the winning side since the beginning of the European session, resulting in the GBP/USD pair hitting a daily high of 1.3235. The market reacted to comments from Germany's Europe Minister Roth, who said that they are close to a Brexit deal, but adding that they shouldn't rule out the chance of a no-deal. Irish PM Varadkar also made it to the wires, saying that there will be no withdrawal agreement without a legally binding backstop, while EU's Chief Negotiator Barnier later said that the Irish border issue remains unsolved and that they may need more time to reach an agreement. The Pound held on to gains despite EU's Tusk later said that a no-deal is more likely than ever before. UK employment data was mixed, although solid wage growth overshadowed an unexpected increase in unemployed people. The ILO unemployment rate for the 3 months to August remained at 4.0% as expected, while the average earnings excluding bonus for the same period rose by 3.1%, the fastest rate since 2009. The UK will release September inflation data this Wednesday, with annual CPI seen at 2.8% in September, up from 2.7% in August, and the core reading down to 1.8% vs. the previous 2.1%.

The pair has broken above 1.3170, a long-term Fibonacci level, now the immediate support, but stalled its advance below Friday's high at 1.3257, which somehow limits the upside potential for the pair. Uncertainty surrounding a Brexit deal maintains bulls on-hold, although it's clear that the market believes a deal will be achieved. In the 4 hours chart, the pair is trading above its 20 SMA, which stands a couple of pips above the mentioned Fibonacci level, reinforcing the relevance of the static support. The Momentum indicator in the mentioned chart heads higher around its mid-line, while the RSI indicator eases from its highs and stands at 53, limiting the upward potential for the pair. A break through the mentioned 1.3257 level could result in a steeper advance, although it's all about Brexit and how the market perceives chances of a deal.

Support levels: 1.3170 1.3130 1.3095

Resistance levels: 1.3210 1.3260 1.3300

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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