GBP/USD Forecast: Handing by a Brexit’s thread

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3325

Intense Brexit talks continue, divergences remain with the focus on fisheries.
London will be placed into the toughest tier of coronavirus restrictions this Wednesday.
GBP/USD retains its positive tone, but direction depends on Brexit.

The GBP/USD pair peaked at 1.3445 this Monday, gapping higher at the weekly opening on news indicating that the UK and the EU decided to extend negotiations into this week. Comments from EU’s chief negotiator Michel Barnier further fueled the pound’s rally, as despite noting that they are still far apart of fisheries, he believes that they could still reach a deal in the coming days.

The pair fell towards 1.3300 after British Health Secretary Matt Hancock announced London would be placed into the toughest tier of coronavirus restrictions starting on Wednesday, amid a sharp rise in infection rates. Hancock added that a new variant of the virus has been identified and that the health system is already under pressure.

The UK will publish on Tuesday its latest employment-related figures. The ILO Unemployment Rate for the three months to October is foreseen at 5.1% from 4.8% previously. The number of unemployed people in November is foreseen at 50K, after printing at -29.8K in the previous month.

GBP/USD short-term technical outlook

The GBP/USD pair is trading well above its previous daily close, with the opening gap still open. The 4-hour chart shows that the price is battling around its 20 and 100 SMA, while far above the 200 SMA. Technical indicators trimmed oversold conditions and entered positive territory, currently at neutral levels. Directional movements will continue to depend on Brexit headlines, and the gap may remain unfilled.

Support levels: 1.3290 1.3240 1.3185

Resistance levels: 1.3350 1.3390 1.3440

View Live Chart for the GBP/USD

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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