- The cross-party Brexit talks and second-tier data awaited to challenge nearby resistance.
- 200-day SMA continues to offer strong downside support.
GBP/USD holds tightly to the 50-day SMA around 1.3100 ahead of the London open on Thursday. The Cable initially took advantage of the EU summit outcome that offered Brexit deadline extension. However, uncertainty surrounding cross-party talks at home still challenges the buyers.
The British Pound (GBP) previously took advantage of soft data from the US and not so upbeat FOMC minutes confronting optimism surrounding the Brexit deadline extension.
The positive news reports spread through the market at the end of the EU summit that provided a flexible extension to the Brexit deadline from April 12 to October 31. The UK will also have rights to vote on the EU election and can propose their candidate as well.
Traders now await details of how the opposition Labour party reacts to the Prime Minister Theresa May’s victory of availing a Brexit deadline extension without having no plan on hand.
Off late, the Tory-Labour alliance has been struggling as the opposition leader Jeremy Corbyn slipped to domestic problems and is also sticking on the Irish border issue than PM May who wants to get ahead of everything so that her plan finally can pass through the British parliament.
Overall risk sentiment in the market, as portrayed by the US 10-year treasury yield, seems balanced as the gauge is almost unchanged near 2.47%.
In addition to Brexit drama, monthly Producer Price Index (PPI) and weekly initial jobless claims from the US will also be closely observed. Initial jobless claims may rise to 211K from 202K during the week ended on April 05. Further, no change is expected to take place in the 1.9% PPI (YoY) for March but the rise to +0.3% from +0.1% can happen if observing monthly format. Also, the PPI ex-food and energy may decline to 2.4% from 2.5% on the yearly footage whereas MoM figures may improve to +0.2% from +0.1% previous outcome.
GBP/USD Technical Analysis
Multiple highs around 1.3120/30 and four-week-old descending trend-line at 1.3155 could keep limiting the GBP/USD upside ahead of shifting market attention to 1.3180 and 1.3200.
For the sellers, the 1.3015 and 1.3000 can provide nearby support while 200-day simple moving average (SMA) figure of 1.2975 and 100-day SMA level of 1.2940 could become Bears’ favorites then after.
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