GBP/USD: Brexit transition deal on the cards, 1.4000 or back to 1.3480 uptrend?

GBP/USD looking fragile, subject to a reversal?
GBP/USD: will Brexit transition deal come this month?

Ross J Burland FXStreet

After making a return trip from 1.3817 back through the 1.3877 European AM sell-off point, cable is looking fragile again, currently, trading at 1.3894, up 0.35% on the day, having posted a daily high at 1.3931 and low at 1.3817.

The DXY is recovering, basing in the 89.50's after a steep decline from just above the 90.00 level, a sell-off in the greenback as risk sentiment got another lift with headlines that North Korea willing to freeze its nuclear program in exchange for guarantees of safety for its communist regime. Another factor underpinning the pounds upside are the hopes of a Brexit transition deal where EU leaders will meet on March 22-23.

GBP/USD sell-off on the cards?

"We remain of the view that PM May might struggle to square the circle that represents the competing interests and positions of the EU, the “soft Brexit” members of her party and the “hard Brexit” Conservatives who are growing frustrated with her leadership. We feel GBP gains are subject to a sudden reversal," analysts at Scotiabank warned.

For the day ahead, the Bank of England chief economist Andy Haldane will be speaking at the Royal Society for the Encouragement of Arts, Manufactures, and Commerce, in London at 18:15 GMT.

GBP/USD levels

GBP/USD: headed to 1.3990/00? - Scotiabank

The 21-D SMA at 1.3915 was pierced but remains a tough nut to break and hold above. If so, a move through 1.4000 would be breaking the descending resistance before the next resistance line at 1.4044. The 200-week moving average is located at 1.4332 and remains a key target through 1.4148. To the downside, the 1.3658 September peak and the 1.3479 2016-2018 uptrends are key.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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