- Renewed Brexit optimism keeps the GBP buoyed, although gains may be capped by risk-aversion.
- Exposed to volatile moves ahead of the fresh Brexit talks between the UK and EU.
The GBP/USD pair looks to extend its Asian consolidative mode into Europe, as a sense of caution prevails heading into a fresh round of Brexit talks between the UK and European Union (EU) scheduled later on Friday.
Markets refrain from placing any directional bet on the pound, as they believe the stand-off between the UK and EU over the Brexit talks could continue, as the EU’s Chief Brexit Negotiator Barnier and the British Brexit Secretary Raab meet to bring in further progress on the Brexit talks.
Moreover, re-ignition of the US-China trade tensions combined with the sell-off in the Emerging Markets (EM) currencies boost the demand for the US dollar at the expense of the higher-yielding assets such as the GBP.
Despite, the negative sentiment around the pound, the British currency manages to derive some support from Thursday’s upbeat comments by Barnier, citing that the EU is ‘prepared to offer a partnership with Britain such as has never been with any other country’.
Later today, in absence of relevant macro updates, the Brexit-related developments will continue to influence Cable ahead of the US-Canada NAFTA talks and the second-liner US revised consumer sentiment data.
GBP/USD Technical Levels
According to Valaria Bednarik, FXStreet’s Chief Analyst, “in the meantime, the 4 hours chart for the pair shows that it’s holding above a bullish 20 SMA, also above the 200 EMA, this last at around 1.2950, indicating selling interest is quite limited. Technical indicators in the same chart have begun easing from extreme overbought readings, rather reflecting the strength of Wednesday’s rally than suggesting upward exhaustion. The pair is still some 100 pips above its key support, as it will turn bearish on a break below 1.2890, the 61.8% retracement of the 2016/2018 rally. Support levels: 1.2985 1.2950 1.2920. Resistance levels: 1.3015 1.3045 1.3085.”
Share
