- The GBP/USD pair took a U-turn from 1.2940 during early Asian trading on Wednesday.
- The pair benefited on the news supporting delayed Brexit.
- The 1.3000 seems immediate resistance for the pair to clear in order to avoid revisiting the sub-1.2900 area.
The British Pound refrained from extending three-day losses by trading around 1.2950 against the USD in Asia on Wednesday. The pairs bounced off the 1.2940 on The Telegraph report that several cabinet ministers have secretly discussed plans to delay Brexit by eight weeks.
The report renewed hopes of delayed Brexit from the March 29 deadline to May 24 despite warnings from the PM Theresa May that such discussion is "counter-productive" to talk about.
Adding to the Pound strength was the US Dollar pullback after the US President Donald Trump’s second State of the Union speech. Trump alleged China of stealing American jobs and wealth. He went on to call the dragon nation to end the unfair trade practices, cut trade deficit and protect the US jobs. The US President also supported the need for Mexican border by saying “I will get it built."
With the expectations of soft Brexit countering uncertainty on the US-China trade deal and political chaos inside the US, the GBP/USD pair benefited at the day’s start.
Moving on, Wednesday lacks the UK important data and fewer political events are scheduled. Theresa May will travel Brussels to meet the EU policymakers and formally announce a renegotiation of her Brexit deal on Thursday. Meanwhile, some of the Tory members of parliament (MPs) are simultaneously discussing technological alternatives to the Irish border backstop plan on the European leaders’ demand. Also, Bank of England (BoE) will have its monetary policy meeting on Thursday wherein it would also release the quarterly inflation report (QIR).
Given the positive start to the day on soft/delayed Brexit hopes, any welcome developments can help the Cable extend its recent recovery.
GBP/USD Technical Analysis
The GBP/USD pair’s U-turn should surpass the 1.3000 round-figure in order to revisit the 200-day simple moving average (SMA) around 1.3037 now. Additionally, pair’s successful rise above 1.3037 can aim for the 1.3100 resistance level.
On the downside break of 1.2910, the 1.2880 and an upward sloping support line, at 1.2800, become important levels to watch.
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