GBP/USD Forecast: USD weakness outweighs Brexit concerns, resistance at risk

The GBP/USD is moving higher, enjoying USD weakness.
France is preparing contingency plans for a no-deal Brexit.
The pair is trading in a narrowing wedge, attempting an upside break.

Yohay Elam FXStreet

The GBP/USD is trading around 1.2900, slightly higher on the day. The US Dollar resumes its falls following the US-Mexico deal. The breakthrough in negotiations triggered a positive, risk-on, mood in markets which weighs on the US Dollar.

The British Pound took advantage of it on Monday during the UK bank holiday and again today when Brits are back to work.

Brexit negotiations continue, and the message from London remains the same: optimism for a deal but preparations for the worst. Across the Channel, France has stepped up its preparations for a no-deal Brexit. It is reportedly set to complete a plan in the next few weeks. In the recent past, any contingency planning for a no-deal Brexit weighed on the pound.

UK International Trade Secretary Liam Fox said that the UK made a reasonable and fair offer to the EU. His words do not seem to promote a compromise.

Second tier US data is due later in the day: the Case Shiller House Price Index and the Conference Board's Consumer Confidence stand out.

The tweets and deeds of President Tump and any developments or lack thereof in the Brexit negotiations will move the pair. Economic data play second fiddle, at least today.

GBP/USD Technical Analysis

The GBP/USD is trading in a narrowing wedge or triangle. Uptrend support began at the 1.2662 level, the 2018 low. Downtrend resistance dates back to last week. The pair is challenging the top.

Other indicators are more balanced, with no clear momentum and the Relative Strength Index is only slightly above balanced levels. The GBP/USD is trading between the 40 and 200 Simple Moving Averages.

1.2940 capped the pair last week. Further above, 1.3000 is a round number and also had a role as support earlier in the year. 1.3045 held cable down in early August. 1.3080 served as support in July.

1.2840 provided support lately. It is followed by the round level of 1.2800 seen in mid-August. 1.2740 capped the pair earlier in the month.

Brexit: Talking is good, timing is bad, and agreeing can be ugly

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

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