GBP/USD Outlook: Bears take a breather after Brexit delay approval

GBPUSD

Sterling stands at the front foot in early Friday's trading and attempts to extend recovery from Thursday's spike low at 1.3004. Fresh bulls probe through pivotal barrier at 1.3148 (Fibo 38.2% of 1.3381/1.3004 descend) clear break of which would allow for further recovery and possible test of converged 20/10SMA's (1.3191/1.3207), former strong support, now reverted to solid resistance. Thick 4-hr cloud (spanned between 1.3170 and 1.3222) also marks strong obstacle and weighs on near-term action. Surprise positive reaction on EU's approval of Brexit delay (initially to 12 Apr, with possible extension to 22 May) pushed sterling from dangerous zone (200SMA / 11 Mar trough at 1.2982/60 respectively) but the downside remains vulnerable due to persisting uncertainty. PM May faces tough work in coming days as chances of eventually passing her plan through the parliament remain low that keeps in play high risk of chaotic scenario on no-deal exit. Also, possibilities of further Brexit delay or even revoking Article 50 remain on the table that further complicates the situation. Scenario of limited recovery before bears re-take control looks likely as technical studies are mixed on daily chart and sentiment remains weak, with additional pressure from thickening weekly cloud. Fresh bearish acceleration would challenge again 200SMA and firm break here and below 1.2960 higher low would expose next strong supports at 1.2927/18 (daily cloud top / 100SMA). Only break and close above 20/10SMA's would sideline existing downside risk.

Res: 1.3170; 1.3191; 1.3207; 1.3222
Sup: 1.3107; 1.3061; 1.3037; 1.3004

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