- GBP/USD has been retreating from the highs as Brexit talks remain stuck.
- The greenback remains under pressure amid transition and vaccine optimism.
- Black Friday’s four-hour chart is showing that cable is at risk of falling off the ascending triangle.
Is it just darkest before a Brexit dawn or are talks about to fall apart? Chief EU Negotiator is traveling to London for in-person talks after completing his quarantine, yet that is the only bit of positive news coming from the negotiations.
UK Prime Minister Boris Johnson has said that the likelihood of a deal depends on the EU and that Britain would prosper with or without an agreement. His comments follow similar finger-pointing by an unnamed EU official who said that there are disagreements on the known topics of fisheries, governance, and setting a level-playing field.
Similar to European Commission President Ursula von der Leyen, Barnier was quoted as saying he does not know if a deal is possible. GBP/USD has reacted to the news with a fall, yet there while both sides continue talking, there is hope.
Everything else favors gains for cable. With the upcoming expiry of the nationwide lockdown, London will return to Tier 2 rather than struggle under more severe Tier 3 terms. UK coronavirus cases continue their downtrend.
While COVID-19 statistics are moving in the wrong direction – a new record of over 90,000 hospitalizations was recorded on Thanksgiving – investors cheer an upbeat political development. President Donald Trump said he would leave the White House if the Electoral College votes in favor of President-elect Joe Biden. The safe-haven dollar is under pressure amid greater political certainty.
Markets also remain hopeful about a vaccine, despite some confusion from the recent data released by AstraZeneca and the University of Oxford. The better efficacy rate of 90% was seen only in a smaller group of people aged 55 or younger. Nevertheless, the British regulators are set to approve the immunization, pending more data.
Overall, Brexit is driving sterling lower while everything else is pointing in the other direction.
GBP/USD Technical Analysis
Pound/dollar is dipping below the bullish ascending triangle. The breakdown is yet to be confirmed, but upside momentum on the four-hour charge is already fading.
Support awaits at 1.3310, which was a double-top and now converges with the 50 Simple Moving Average. It is followed by 1.3265 and 1.3245, which worked as cushions earlier in November.
Resistance is at the recent high of 1.3397, and then by September’s peak of 1.3495. Close by, the December 2019 high of 1.3510 awaits.
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