The GBP/USD pair reached this Friday a fresh weekly high of 1.3323, extending the rally triggered late Wednesday by headlines indicating that the EU is willing to grant the UK a two-year transitional period, conditioned to the UK to fulfill its financial compromises. The Sterling, however, retreated on headlines that EU leaders won't open talks on the matter because of the lack of progress on the divorce settlement. Anyway, and despite Michel Barnier announced a deadlock, EU representatives are preparing for future trade talks.
There were no relevant news coming from the UK this morning, with market's attention centered on upcoming US CPI an Retail Sales data. As usual, American figures will be a less-relevant market mover for the pair as the focus remains around Brexit and its future consequences.
Despite the intraday retracement, the pair remains above the 61.8% retracement of last week's decline around 1.3265, with the level being the immediate support for the upcoming hours. The 4 hours chart shows that the price is also developing above a bullish 20 SMA that aims to surpass a horizontal 200 EMA, both around 1.3215. In the same chart, technical indicators have lost their upward strength, but hold within positive territory, also indicating limited downward potential. The upside will be open if US data comes worst-than-expected, with scope then to extend its advance up to the 1.3380/1.3400 region.
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