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GBP/USD inches closer to 1.3050 on Brexit optimism, US PCE eyed

8/30/2018, 11:32:51 AMTrading Strategies
GBP/USD inches closer to 1.3050 on Brexit optimism, US PCE eyed

The GBP/USD pair broke slightly higher from the overnight bullish consolidation and hit fresh four-week highs at 1.3039, now awaiting fresh impetus for the next push higher.

So far this Thursday, the spot maintains the upbeat momentum, triggered by renewed Brexit optimism while broad-based US dollar weakness amid flattening US yield curve and latest Trump’s adjustment on the US metals tariffs also lends support to the prices.

Wednesday’s sharp rally in Cable was mainly driven by the European Union (EU) Chief Brexit Negotiator Barnier’s comments, citing that the EU is ‘prepared to offer a partnership with Britain such as has never been with any other country’. The comments offered the much-needed respite to the GBP bulls, who were eagerly awaiting some breakthrough on the ongoing Brexit negotiations.

Looking ahead, the GBP markets will continue to cheer the Brexit offer news ahead of the UK mortgage approvals and net lending to individuals data due on the cards at 0830 GMT. Also, of relevance remains the US July core for fresh US dollar trades, as markets looked past upbeat US Q2 GDP figures reported a day before.

GBP/USD Technical Levels

FXStreet’s Chief Analyst, Valeria Bednarik, notes: “The 4 hours chart for the pair shows that it has broken through the 200 EMA for the first time in more than two months with a strong volume candle, usually a sign of further gains ahead. In the same chart, the price is now well above a bullish 20 SMA, which converges with the 61.8% retracement of the 2016/2018 bullish run at around 1.2890, while technical indicators are trying to stabilize in overbought readings. The pair has now a strong resistance at around 1.3045 where it met sellers on August 3, with gains beyond the level favoring an extension up to the 1.3080/90 region.”