- GBP/USD recovery from 1.2880 has been capped at 1.3025.
- The pound moves back and forth on Brexit news.
- FX analysts at UOB observe an important resistance at 1.3050.
The sterling rebound from Friday’s lows at 1.2880, has been capped at 1.3025 and the pair has lost momentum during the US session on Monday, returning to the mid-range of 1.2900.
The pound rejected from 1.3000 area
Cable has been trading back and forth on Monday, amid contradictory reports about the Brexit negotiations with the EU. GBP/USD appreciated during the early London session, with the investors confident that the UK and the EU will reach a last-minute deal to avoid a “hard Brexit” as the UK affirmed during the weekend that the doors are still open for a Brexit deal.
British Negotiator, Michel Frost, however, has affirmed on Monday that there is no point on resuming talks, while Michael Gove, a senior UK minister affirmed that the UK is ready for an “Australian-style” exit from the Union. These comments have dampened investors’ hopes on a last-minute deal, undermining the positive tone on GBP crosses and sending GBP/USD back below 1.3000.
GBP/USD faces an important resistance at 1.3050 – UOB
On a technical level, the FX analysis team at UOB point out to 1.3050 resistance area: “We indicated yesterday (15 Oct, spot at 1.3015) that ‘the rapid swings have resulted in a mixed outlook’ and GBP ‘could trade between 1.2845 and 1.3120 for a period of time’. GBP subsequently gave up most of its gains from Wednesday (14 Oct) as it dropped to 1.2891 before closing on a weak note at 1.2899 (-0.85%). While the underlying tone has weakened, it is too soon to expect a sustained decline below 1.2845. Overall, GBP is likely to trade on a slightly defensive mode with 1.3050 acting as a strong resistance.”
Technical levels to watch
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