GBP/USD rises above 200-day MA on reports of Brexit customs deal, needs break above 1.3618

Oversold GBP has picked up a bid on reports the UK is ready to stay in customs union beyond 2021.
Currently, GBP/USD is trading above the 200-day MA, needs to break above 1.3618 (May 10 high) to confirm a bottom.

Omkar Godbole FXStreet Contributor

GBP/USD is on the rise and trading above the 200-day moving average of 1.3556, courtesy of reports that the UK is willing to stay in the customs union beyond 2021.

The Telegraph reported earlier today that Britain is set to tell Brussels it is prepared to stay in the customs union beyond 2021 as Prime Minister May's cabinet remains split over the kind of future customs system London should seek with the bloc.

So far, we have not heard of any response from the EU. Further, there is still plenty of Brexit uncertainty in the air. Nevertheless, the oversold GBP is buoyed by the news of customs deal.

As of writing, the pair is trading at 1.3562. The 5-day moving average (MA) and the 10-day MA are beginning to rise in favor of the GBP. Further, the 14-day relative strength index (RSI) is rising from the oversold territory, having created a bullish divergence over the last 12 days.

So, GBP could rise further towards the key resistance at 1.3618 (May 10 high). A close above that level would confirm a short-term bullish reversal.

GBP/USD Technical Levels

The immediate resistance is seen at 1.3618 (May 10 high) ahead of 1.3712 (March 1 low) and 1.3765 (Feb. 9 low). On the downside, support is seen at 1.3529 (5-day MA), 1.3483 (Asian session low) and 1.3451 (May 15 low).

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Bullish	Neutral	Low
1H	Bullish	Overbought	Expanding
4H	Bearish	Neutral	High
1D	Bullish	Oversold	Low
1W	Bullish	Oversold	Shrinking
Updated May 17, 02:45 GMT

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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