GBP/USD Current price: 1.3320
- Speculation that the UK and the EU will reach a trade deal underpin sterling.
- UK manufacturing activity improved in November, but services output contracted.
- GBP/USD retains its bullish stance in the near-term, trading above 1.3300.
The GBP/USD pair shed over 100 pips from a daily high at 1.3397, trimming daily gains on sudden demand for the greenback. The pound advanced throughout the first half of the day amid Brexit optimism, although EU’s negotiator Michel Barnier said that big differences persisted in trade talks but added that both sides were pushing hard for a deal, despite fundamental divergences still remain.
UK data provided additional support to the sterling. Manufacturing activity improved in November, according to Markit, as the Manufacturing PMI surged from 53.7 to 55.2. The services index contracted by less than anticipated, falling to 45.8 from 51.4. Tuesday will be light in the UK regarding macroeconomic data, although expectations mount about a Brexit announcement.
GBP/USD short-term technical outlook
The GBP/USD pair has traded as low as 1.3263, recovering afterwards to the current 1.3320 price zone. Bulls retain control of the pair, as the 4-hour chart shows that it bounced from a bullish 20 SMA, which continues advancing above the larger ones. Technical indicators corrected overbought conditions, but the bearish momentum receded with indicators holding within positive levels, indicating limited selling interest, probably due to Brexit hopes.
Support levels: 1.3265 1.3210 1.3165
Resistance levels: 1.3365 1.3410 1.3460
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