- Cable keeps the recent range of 1.3025/1.3340, breakout seen giving direction to the pair.
- Focus on Brexit related newsflow.
- 10-year US-UK yield differential looks heavy.
Cable's retreat from the Friday's high of 1.3260 continued in Asia as it fell to 5-day MA level of 1.3186. The British currency appears to have been dragged down by the Euro, which came under pressure on account of the German political instability.
Focus on Brexit
Finance minister Philip Hammond said on Sunday he was becoming more convinced that Britain would secure a Brexit deal with the European Union. Also, as per FT report, UK's PM May is said to have got Cabinet support for a higher "divorce bill" offer for the EU. So far, markets have not responded positively to the FT report, although things may change in Europe.
Yield differential looks heavy
The 10-year US-UK yield differential appears to have left a lower high at 109.9 basis points on Nov. 8 and now looks set to narrow further below 100 basis points in the USD negative manner. Cable could revisit Friday's high of 1.3260 if the yield differential narrows as suggested by the chart.
GBP/USD Technical Levels
FXStreet Chief Analyst Valeria Bednarik writes, "the daily chart shows that the pair is at the upper end of these last weeks' range, but still technically neutral according to the daily chart, as the price established above a flat 20 DMA, while technical indicators remain around their mid-lines, with limited upward strength. In the 4 hours chart, the pair is biased higher, with the 20 SMA crossing above the 200 EMA below the current level, as technical indicators bounced after nearing their mid-lines, with a modest bullish slope ahead of the weekly opening. The price is near the 1.3220/30 region, an immediate short-term resistance, but a stronger one is located at 1.3259, the high set last week.
Support levels: 1.3195 1.3160 1.3130
Resistance levels: 1.3225 1.3260 1.3300
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