GBP/USD analysis: upward potential limited after White Paper release

GBP/USD Current price: 1.3218

  • UK White Paper on Brexit strategy disappointed Brexiteers, raises concerns within European Parliament.
  • GBP/USD posted a shy advance on dollar's weakness, poised to break lower.

The GBP/USD pair posted a modest daily advance to settle in the 1.3220 price zone, after trading as low as 1.3179. The movements were purely driven by the greenback, despite the UK government finally published the White Paper that draws the kingdom's future relations with the EU. The document that still needs to be analyzed and validated by EU authorities,  triggered a negative Brexiteers' reaction, as Jacob Ress-Mogg said it was a "bad deal for Britain." The blueprint offers multiple intermediate solutions, as for example, the UK will continue to follow EU law but won't be directly affected by European Courts. Unlimited migration will come to an end, but EU citizens will be able to travel freely and work in the UK without a visa on a temporal basis. Regarding customs, the document proposed copying EU rules to maintain a "frictionless trade." Regarding the key Irish border issue, the situation remains complicated. After the release of the paper, the European Parliament threatened to veto the plan,  concerned that the temporary customs plan with no regulatory alignment would lead to border checks. Technically, the risk is leaned to the downside according to the 4 hours chart, as the pair met selling interest around a bearish 20 SMA a couple of times, currently at 1.3240, while technical indicators remain in negative territory, with the Momentum aiming modestly higher but the RSI losing upward strength and heading marginally lower at 45.

Support levels: 1.3180 1.3155 1.3110

Resistance levels: 1.3240 1.3285 1.3320  

View Live Chart for the GBP/USD

 

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