GBP/USD Outlook: brexit deal has been reached but story still needs to be completed

Slobodan Drvenica Windsor Brokers

GBP/USD

Cable spiked to new over five-month high, just ticks ahead of psychological 1.30 barrier (also weekly cloud base) on news that the EU and UK negotiators reached a deal. Fresh optimism on orderly divorce inflated pound, but traders took their profits and pushed the price below 1.2900 handle. This signals that markets show strong hesitation at 1.30 resistance, but also worries that DUP will eventually back the deal and dissonant tones from the opposition, describing the plan as worse than the Theresa May's one. Focus turns towards ‘super Saturday' when the UK parliament is due to vote on the plan. Parliament's approval will finally verify the deal and open way for finalizing Brexit process, as 31 October deadline is in just two weeks. Despite strong bullish sentiment on Brexit deal, caution is required as strong rally in last six days pushed daily indicators into overbought zone and traders may more aggressively take their profits that may lead to ‘buy the rumor – sell the facts' scenario. Broken 200DMA (1.2713) marks significant support and firm break below would weaken near-term structure and risk deeper fall.

Res: 1.2989; 1.3000; 1.3045; 1.3100
Sup: 1.2876; 1.2802; 1.2713; 1.2686

Interested in GBP/USD technicals? Check out the key levels

1. R3 1.3146
2. R2 1.3013
3. R1 1.2922
PP 1.2789
1. S1 1.2698
2. S2 1.2565
3. S3 1.2474

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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