“¢ GBP finds fresh traction on news that DUP was privately supporting May’s Brexit Plan B.
“¢ Some renewed USD weakness remained supportive of the ongoing positive momentum.
“¢ The end of the week profit taking now seemed to cap gains amid overbought conditions.
The GBP/USD pair erased a major part of its early gains to 2-1/2 month tops and was now seen retreating farther below the 1.3100 handle.
Against the backdrop of receding risks of a no-deal Brexit, the British Pound got an additional boost on Friday following the news that Ireland’s DUP was prepared to conditionally back the UK PM Theresa May’s Brexit Plan B.
The pair built on its strong recovery move from flash crash lows to 20-month lows, set earlier this month and climbed further beyond the very important 200-day SMA to hit an intraday high level of 1.3139.
Some renewed US Dollar selling bias, despite a pickup in the US Treasury bond yields amid risk-on mood, remained supportive, though the positive momentum now seems to have already run out of steam.
The pair quickly retreated over 50-pips from session tops and in absence of any fresh catalysts, the downtick could be solely attributed to some profit-taking, especially an upsurge of over 300-pips since the beginning of this week.
It would now be interesting to see if the pull-back is seen as a buying opportunity or marks the onset of a fresh leg down as the focus now shifts to next week’s parliamentary debate and vote on May’s alternative Brexit plan.
Technical levels to watch
Mario Blascak, FXStreet’s own European Chief Analyst writes: “The technical oscillators including the Relative Strength Index and Slow Stochastics are both elevated with Slow Stochastics making the bearish crossover in the Overbought territory.”
“The GBP/USD rose to a fresh 11-week high of 1.3139 and a corrective pullback is a result of the end of the week profit taking. The bullish breakout of the Fibonacci level of 1.2990-1.3000 becomes a support level now and the first price target on the downside. On the upside, the immediate resistance is at around 1.3150,” he added further.
Share
