“¢ The DUP-positive noises triggered the initial leg of intraday rebound.
“¢ Renewed optimism over the EU summit provided an additional boost.
The GBP/USD pair quickly reversed a knee-jerk slide to sub-1.2900 level and rallied over 80-pips, rising back above mid-1.2900s amid a flurry of Brexit headlines.
The initial leg of rebound from an intraday low level of 1.2886 was triggered by some positive headlines, saying that the UK government expected DUP to fall in line on the Brexit deal when they see the final terms and reach an agreement later today.
The uptick got an additional boost amid some renewed optimism over the likelihood of an EU Brexit summit on November 25 after Irish Prime Minister Leo Varadkar said that they are close to legally operable deal and if the UK cabinet backs Brexit deal.
Meanwhile, the UK PM Theresa May’s comments on the Irish backstop, saying that any backstop has to be temporary, was seen as something that the parliament wanted and remained supportive of the intraday up-move back above mid-1.2900s.
It, however, remains to be seen if the pair is able to build on the positive momentum or bears come back into the picture near the key 1.30 psychological mark ahead of the crucial UK Cabinet meeting on the Brexit deal, scheduled later today at 1400 GMT.
With Brexit headlines turning out to be an exclusive driver of the pair’s near-term momentum, today’s release of the latest US consumer inflation data might influence the US Dollar price dynamics but seems more likely to pass unnoticed for the GBP traders.
Technical outlook
Mario Blascak, FXStreet’s own European Chief Analyst writes: “With Brexit deal about to be approved, the potential for the upside mounts as the Momentum and the Relative Strength Index both flatlined while Slow Stochastics is set to make a bullish crossover on a daily chart. Moreover, the golden cross of a 50-day moving average crossing over a 100-day moving average to the upside was formed on a daily chart indicating final trend reversal targeting 1.3060 before moving to 1.3380 and 1.3460 important Fibonacci level. Failure of Brexit deal to materialize should see GBP/USD fall towards 1.2900 first before testing 1.2830 next.”
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