GBP/USD Forecast: Brexit botches sterling's surge above ascending triangle, data eyed

"I cannot tell today if in the end there will be a deal." – European Commission President Ursula von der Leyen's words about a Brexit deal have poured cold water on sterling's rise. She added that progress has been made and that decisive days are ahead. 

Will the EU and the UK strike an accord on future relations? Investors know that 95% is already agreed, but the remaining 5% – fisheries and governance – remain sticking points. Additional headlines are set to rock the pound. 

Earlier, the Bank of England noted that a no-deal Brexit would hit the British car industry hard and that a no-deal exit would inflict more long-term damage to the economy than the virus. 

Outside the neverending Brexit saga, sterling has been advancing amid broad market optimism, stemming mostly from the official start of President-elect Joe Biden's transition. The lower political temperature in the US sent stocks rallying to record highs and the safe-haven dollar down. 

Markets are also buoyed by vaccine optimism despite news that AstraZeneca's immunization program is only 90% efficient within a group of people under the age of 55. Nevertheless, investors await final figures from the project conducted with the University of Oxford and the authorization of other vaccines. 

After Tuesday's rally, markets are on pause ahead of a big bulk of US data. Third-quarter Gross Domestic Product will likely be confirmed at 33.1% while October's Durable Goods Orders set to show slower investment growth. The even more frequent weekly jobless claims are also eyed after they disappointed last week.

See:

• US GDP Preview: Good reasons for an upside surprise, but not necessarily a dollar surge

• US Durable Goods Orders October Preview: Unemployment what unemployment?

• US Initial Jobless Claims Preview: STurn that rear-view mirror around

Other figures such as New Home Sales and Personal Spending for October are also awaited. The release calendar is compressed due to Thursday's Thanksgiving holiday. 

In the meantime, UK coronavirus infections are declining, while the US remains in a dire situation, with yet another new hospitalizations record – over 88,000. Investors seem to have put covid concerns on the backburner. 

Source: FT

Overall, Brexit remains the primary driver, yet it competes with US data for influence. 

GBP/USD Technical Analysis

Pound/dollar is trading in an ascending triangle pattern in the past few days. Uptrend support has been running since early November yet the recent rejection just under 1.34 creates the ceiling of this pattern. Technical textbooks suggest a big breakout is on the cards, and this notion is supported by upside momentum on the four-hour chart and the absence of overbought conditions. 

The recent peak of 1.3397 is critical resistance. It is followed by 1.3420 and 1.3510, levels that were in play in August. 

Support awaits at 1.3310, which capped cable twice this month. It is followed by 1.326 and 1.3245, both stepping stones on the way up.