GBP/USD Forecast: Progress in Brexit talks may not be enough

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3035

Upbeat UK Retail Sales and expanding business activity in the country supported the pound.
Cautious optimism surrounds Brexit talks, concerns mount around covid contagions.
GBP/USD is at risk of falling in the near-term, immediate support at 1.3020.

The GBP/USD pair fell for a second consecutive day but managed to close the week with gains around 1.3040. UK macroeconomic figures released on Friday were generally encouraging, as the country reported September Retail Sales which came in at 1.5% MoM and 4.7% YoY, beating expectations. Also, the preliminary estimate of October Manufacturing PMI resulted at 53.3, better than expected, while the Services PMI missed expectations but remained within expansion levels, resulting in 52.3.

In the Brexit front, cautious optimism prevails, as the EU and the UK resumed trade talks. News indicating that French President Emmanuel Macron has said to the local fishing industry to brace for impact, somehow indicated that a deal is closer. However, investors are still cautious about the matter. Meanwhile, the resurgent number of coronavirus contagions in the UK pressures authorities, who refuse to impose a new full lockdown. The kingdom won’t publish relevant macroeconomic figures this Monday.

GBP/USD short-term technical outlook

From a technical point of view, the GBP/USD pair has limited bullish potential. The daily chart shows that it is developing above all of its moving averages, which are anyway confined to a tight range with modest bullish slopes. Technical indicators eased within positive levels, and hold around their midlines. The 4-hour chart shows that the pair settled below a bullish 20 SMA and that the Momentum indicator heads firmly lower within negative levels. The RSI indicator is flat within neutral levels, leaving the risk skewed to the downside.

Support levels: 1.3020 1.2970 1.2915

Resistance levels: 1.3060 1.3115 1.3150

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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