GBP/USD trying to put in a floor at 1.3100 before stretching higher

• Brexit headlines continue to buoy the Cable into recent highs, despite a lack of seeable movement on the table.
• Thursday could see thin action as investors brace for Friday’s UK GDP readings.

The GBP/USD is continuing to hold just above the 1.3100 key technical level after seeing impressive gains recently, fueled largely by Brexit optimism and fresh Dollar-selling following US mid-term elections.

The Irish border issue remains unresolved, little progress has been seen on trade negotiations and terms of the UK remaining within the EU’s customs union post-Brexit, and the skeletons of any kind of a plan have yet to be seen, but London markets are remaining hopeful that a plan for the upcoming European divorce will see a satisfying resolution in time for the final Brexit date next March.  

Little data of note is slated for the economic calendar for Thursday, but GBP traders will be gearing up for the UK’s GDP reading, due on Friday, and Brexit headlines continuing to leak out of the UK are suggesting that both sides of talks are “hoping” to find some kind of breakthrough by this Friday.

GBP/USD levels to watch

The Cable managed to peak at a high of 1.3175 yesterday, and according to FXStreet’s own Valeria Bednarik, continued upside sees significant technical headwinds: “the pair retreated from the mentioned high but holds well above the 1.3100 figure, maintaining a positive technical stance. In the 4 hours chart, the pair settled well above a bullish 20 SMA, which extended its advance beyond the 200 EMA, this last some 150 pips below the current level. Technical indicators have corrected from extreme readings, but lost downward strength, now consolidating in overbought territory. The pair has multiple intraday highs and lows in the 1.3190 price zone, with a break above it opening the doors for a retest of the October high at 1.3257.”

Support levels: 1.3040 1.3000 1.2970    

Resistance levels:  1.3105 1.3150 1.3185