GBP/USD pops to daily highs near 1.2960… on Brexit rumours, of course

Cable shoots higher and clinches tops near 1.2960.
UK CPI came in below expectations during January.
Rumours on probable extension of Article 50 in place.

Pablo Piovano FXStreet

The demand for the Sterling is now picking up extra pace and is lifting GBP/USD to fresh 3-day tops in the boundaries of 1.2960.

GBP/USD shrugs off CPI results

Cable moved higher in response to market chatter considering once again the likeliness that the key Article 50 could extended, briefly testing the key 200-hour SMA around 1.2960.

However, it is worth recalling that Brexit Secretary S.Barclay has already talked down that potential scenario, contradicting Tuesday’s comments from May’s chief negotiator O.Robbins.

This way, GBP managed to quickly leave behind disappointing inflation figures for the month of January published earlier in the European morning, re-focusing instead on the psychological 1.3000 the figure.

What to look for around GBP

The British Pound is expected to remain under increasing pressure as we get closer to the March 29 deadline and there is still not a hint of a solution to the EU-UK divorce, where the Irish backstop stays in centre stage and a ‘hard Brexit’ scenario is not totally ruled out. Extra weakness hitting the Sterling also comes from deteriorated fundamentals in the UK, the persistent downtrend in inflation as well as lower growth forecasts, as per the latest BoE event.

GBP/USD levels to consider

As of writing, the pair is gaining 0.32% at 1.2931 and a break above 1.2960 (200-hour SMA) will open the door to 1.3000 (high Jan.17) and then 1.3019 (200-day SMA). On the flip side, the next down barrier lines up at 1.2888 (100-day SMA) seconded by 1.2832 (low Jan.12) and finally 1.2812 (55-day SMA).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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