- Rebounds on Phase 2 optimism ahead of the EU Summit.
- The UK industrial figures, NFP in focus.
The GBP/USD pair staged a solid comeback and regained 1.35 handle last hours, having slumped to 1.3455 levels in a knee-jerk reaction the Brexit deal announcement.
GBP/USD: Risk-on underpins
The GBP/USD moves are mainly driven the Brexit, with the rates sold-off nearly 70-pips on the back of ‘Sell the fact’ trading after the reports hit the wires that the UK PM May has clinched a historic Brexit deal with the EU in Brussels. Markets had already priced-in the Brexit deal agreement and hence, booked profits on their GBP longs on the headlines.
However, the sell-off was short-lived, as the bulls jumped back on the bids, with markets expectant that the second phase of Brexit talks will also be successful after the EU President Juncker said that the EU is it is ready to begin work on the Brexit transition after next week’s Summit.
Focus now shifts towards the UK industrial and manufacturing production data due to be released alongside the goods trade balance for further momentum. Also, of relevance remains the US NFP report, which shape up tone for the markets ahead of next week’s Fed meeting.
GBP/USD Technical Levels
According to Omkar Godbole, Analyst at FXStreet: “A move below 1.3431 (10-day MA) could yield a sell-off to 1.3320 (previous day's low), under which a major support is seen at 1.3243 (50-day MA). On the other hand, a close above 1.3520 (session high) would add credence yesterday's bullish engulfing candle and shall open doors for 1.3596 (Sep. 22 high) and 1.3657 (Sep. 20 high).”
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