GBP/USD: Further developments on Brexit, US-China trade deal awaited amid recent recovery

The GBP/USD pair took a U-turn from the early-day Brexit driven declines.
1.3240 and 50-day SMA continues to be the important levels to watch.

Anil Panchal FXStreet

GBP/USD is on the bids near the intra-day high of 1.3190 ahead of London open on Thursday. The quote earlier dropped to a week’s low on the pessimistic Brexit headlines but recovered afterward as developments surrounding the US-China trade deal and comments from the Chinese Premier pleased global investors to trim greenback buying.

Earlier on Thursday, the members of the UK parliament (MPs) turned down all the eight Brexit proposals that were highlighted in case parliament takes the departure process control from the government. Even if the same could have garnered support for the PM Theresa May’s third Brexit proposal, comments from her alliance DUP and an influential Tory lawmaker, Jacob Rees-Mogg, signal she will still be defeated on Friday.

The US delegates comprising the Treasury Secretary Steve Mnuchin and the Trade Representative Robert Lighthizer are in Beijing for a two-day visit to negotiate the trade deal. The event undoubtedly gained market attention when Reuters reported the positive developments quoting the US policymaker. Also, upbeat comments from the Chinese Premier Li Keqiang further steered traders off the US Dollar.

While recent market moves highlight the importance of the reports from Beijing, the UK PM May also needs to struggle for gaining enough support for her Brexit deal if she is ready to face another vote on Friday. Adding to this, the final reading of the US fourth quarter (Q4) gross domestic product (GDP) will also acquire the investors’ attention. The US Q4 2018 annualized GDP may weaken to 2.4% from 2.6% prior.

GBP/USD Technical Analysis

Unless offering a day’s close beneath 50-day simple moving average (SMA) figure of 1.3080, the chances of the GBP/USD pair’s pullback to 1.3240 and 1.3280 can’t be turned down. However, 1.3310 and 1.3380 could challenge the bulls afterward.

If at all sellers manage to drag the quote under 1.3080, the 1.3030 and 1.3000 can please them ahead of highlighting 200-day SMA level of 1.2980.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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