GBP/USD Current Price: 1.2168
- UK CBI survey showed a modest recovering in manufacturing activity in August.
- German Chancellor Angela Merkel referred to “practical solutions,” over the Irish border issue.
- GBP/USD needs to extend gains beyond 1.2220 to have more chances of recovering.
The GBP/USD pair fell to 1.2063, as Sterling was undermined by concerns about a hard-Brexit. During London trading hours, EU’s Donald Tusk said that the backstop “is an insurance to avoid a hard border on the island of Ireland unless and until an alternative is found,” adding that without a realistic alternative, those wanting to take it down are in fact supporting a border in Ireland, clearly referring to UK PM Boris Johnson. Things changed following comments from German Chancellor, Angela Merkel who said that they must think about “practical solutions,” when referring to the Irish backstop, somehow hinting the EU is willing to discuss an alternative, although she quickly added that the withdrawal agreement wouldn't be reopened. Nevertheless, the market is looking at the Pound in a new light of hope, therefore helping GBP/USD bounce to fresh weekly highs. The CBI Industrial Trends Survey showed that orders recovered marginally in August, with the index at -13% after printing -34% in July. This Wednesday, the UK will only release July Public Sector Net Borrowing.
GBP/USD short-term technical outlook
The GBP/USD pair has topped for a third consecutive week in the 1.2170 price zone, heading into the Asian opening not far below a daily high of 1.2179, which favors additional gains ahead. Also, the pair is ending the day above a Fibonacci level, the 23.6% retracement of its latest daily slide at 1.2142. The pair has been consolidating around the current level pretty much since the month started. The 38.2% retracement of the same decline at 1.2220 is now seen as an inflection point as once above the level, chances of a recovery will be more significant. Technical readings in the 4 hours chart offer a neutral-to-bullish stance as the pair has extended its advance above the 20 and 100 SMA, with the shortest about to cross above the larger one. Technical indicators, however, continue to lack directional strength, the Momentum stuck around its 100 level and the RSI currently consolidating around 60.
Support levels: 1.2145 1.2100 1.2065
Resistance levels: 1.2185 1.2220 1.2250
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