GBP/USD capped within bearish correction of double top highs

GBP/USD headed back below 1.395 key support?

GBP/USD eyes remain on politics for the cross. 

GBP/USD is running out of steam into the NY close in a rebound from 1.3220 from a double top high of 1.3280 offered and low of 1.3223 bid, however, well within the bullish channel still. There had been some positive vibes circulating Brexit from the weekend news that was supportive and making a bullish case in sterling as market participants consider progress in negotiating the U.K.’s divorce bill. 

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Equally, the continued doubts around the US recovery and indeed the tax plan progress has been a weight on the dollar. However, with the Thanksgiving break coming up this Thursday, the tax reform discussion is not likely to resurface until next week and markets will remain on the back foot until then. 

GBP/USD levels

Analysts at Commerzbank noted that GBP/USD, last week, eroded the short-term downtrend, but failed to effectively clear the 55-day ma at 1.3243, and has somewhat neutralised the immediate outlook. "We remain unable to rule out a move to 1.3338/43. While it holds here, our attention remains on the 1.3076 2016-2017 uptrends. The 1.3076 level represents the break down point to 1.2830/1.2774, the 38.2% retracement and August low, and the 1.2575 50% retracement," the analysts added. 

Valeria Bednarik, chief analyst at FXStreet explained that the 4 hours chart shows that the price remains well above a bullish 20 SMA, which crossed above a still flat 200 EMA, while technical indicators have gyrated lower, holding anyway within a positive territory. "Below 1.3195, the risk will lean towards the downside, with scope then to extend its decline toward 1.3130," Valeria noted.