GBP/USD pulls back to 1.3280 after failure at 1.3315 resistance area

• GBP/USD's four-day rally hits resistance at 1.3315.
• Pound appreciates on hopes of an imminent Brexit deal.
• GBP/USD might reach 1.3474/1.3514 – Credit Suisse.

The sterling appreciated for the fourth consecutive day on Wednesday, fuelled by higher hopes of a trade deal with the EU. The pair, however, was rejected at 1.3315, for the second time in the last two weeks before returning to 1.3285 area

Brexit deal hopes are pushing cable higher

Investors are a bit more optimistic about the possibility of a last-minute deal with the EU, which has reflected on a broadly stronger pound this week. The exit of UK top Government adviser and hardline Brexiteer, Dominique Cummings, and the positive comments from some negotiators have boosted confidence that a hard exit from the Union can still be avoided.

Furthermore, the pharmaceutical giant Pfizer has revealed that the COVID-19 vaccine developed together with BioNTech is 95% effective, with a success rate of 94% in adults above 65 years old. This news combined promising results published by Moderna earlier this week have eased fears about the surging infections and have provided a fresh impulse to the pound on the grounds that the UK is one of the worst-hit countries in Europe.

On the macroeconomic front, British Consumer inflation accelerated 0.7% year on year in October, slightly above the consensus 0.6%, which might have also contributed to pushing the pound higher during the European trading session.

GBP/USD rally might extend to levels beyond 1.3500 – Credit Suisse

The FX analysis team at Credit Suisse sees the pair breaching 1.3315 resistance area and possibly extending to 1.3500: “Beyond 1.3310/19 should reassert the rally for a move to 1.3403/09 next and eventually back to long-term price and ‘neckline’ resistance at 1.3473/1.3514. Above here, which we eventually look for is needed to see a major base secured, clearing the way for a move above 1.4300.” 

Technical levels to watch