GBP/USD analysis: confidence mounts, GBP raises
|GBP/USD Current price: 1.3027
- Brexit-related positive headlines indicate that nobody wants a tough divorce.
- UK employment data should be Pound's next catalyst.
The GBP/USD pair jumped pass 1.3000 mid-European morning, reaching a 5-week high of 1.3051, following news indicating that EU's Chief Negotiator Barnier said that a "realistic" Brexit agreement could be achieved in six to eight weeks. That comes within the initial target date which is the EU Summit to take place next October 18th. Despite no details were offered on how they plan to deal with the Irish border issue, which seems to be the only reason holding back a deal, the Pound held on to gains, as these words indicate that nor the UK, neither the EU want a hard-Brexit. Before the positive header, the GBP/USD pair was trading around Friday's close, as UK data came in mixed. July monthly GDP beat expectations in July according to the official release up 0.3%, while the NIESR GDP estimate for the three months to August printed 0.6%, matching the previous reading but below market's expectations of 0.7%. Industrial Production rose by less-than-expected In July, up by just 0.1% MoM, while manufacturing output contracted 0.2%. The UK monthly employment report will be out this Tuesday, with the ILO unemployment change is seen steady at 4.0% and wages seen posting a modest advance.
The pair is trading firmly above the 1.3000 figure and not far below the mentioned high, offering a bullish short-term technical perspective, particularly as previous attempts to break above the mentioned threshold were quickly reverted. In the 4 hours chart, the price surpassed its moving averages, with the 20 SMA about to cross above the 200 EMA, both converging around 1.2940. Indicators in the mentioned chart have stabilized well above their midlines, holding near daily highs but losing upward momentum given that the price can go beyond the mentioned daily high. Nevertheless, the upside is favored, with scope now to test 1.3170, the 50% retracement of the 2016/18 rally.
Support levels: 1.2985 1.2940 1.2890
Resistance levels: 1.3050 1.3095 1.3130
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