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GBP/USD has been rising on hopes for a Brexit deal following progress in talks despite the fact that Wednesday’s 4-hour chart is showing cable is nearing overbought conditions, FXStreet’s Analyst Yohay Elam reports.

See: Brexit to knock around 5% off UK GDP in the long run – ABN Amro

Key quotes

“Some resistance in recent days implies that a deal is not fully priced in and there is more room to rise – not a ‘buy the rumor, sell the fact’ response.”

“Markit’s preliminary UK Purchasing Managers’ Indexes for December were mixed and inflation missed estimates with a yearly increase of 0.3%. In the US, PMIs are overshadowed by Retail Sales figures for November, which are set to reflect a virus-related slowdown.”

“The main event of the day is the Federal Reserve’s decision and speculation about the bond-buying scheme is rife. There are some chance markets would be unhappy with the Fed staying put. New forecasts are eyed.”

“Optimism about a fiscal deal in the US has weighed on the US dollar. Will white smoke come out in Washington before it is seen in Brussels? Both deals would be GBP/USD-positive – yet Brexit remains the critical topic.”

“The Relative Strength Index on the 4-hour chart is nearing 70 – on the verge of entering overbought conditions. Resistance awaits at 1.3520, the daily high, followed by the 2020-peak of 1.3540. Support is at 1.3480, a peak that was seen last week, followed by 1.3450, a high point from this week.”