GBP/USD: The Good Is Likely To Beat The Bad And The Ugly, Bullish Breakout Eyed

The ugly – Brexit

Brexit negotiations remain around “95% done” – while higher than AstraZeneca’s best efficacy figures, the lack of a breakthrough on the most contentious issues is becoming worrisome as the clock ticks down to year-end, when the transition period expires.

Will the EU and the UK kick the can down the road? The idea of an interim agreement floated on Monday, adding a layer of complication. Headlines range from hints of an imminent accord to a collapse in talks, adding to the confusion.

Overall, most factors point to the upside, yet risks loom large. 

GBP/USD Technical Analysis

(Click on image to enlarge)

Pound/dollar has been benefiting from upside momentum on the four-hour chart and is trading above the 50, 100 and 200 Simple Moving Averages. The Relative Strength Index is still below 70, thus outside overbought conditions.

Overall, the bulls are in full control. Resistance is at Monday’s peak of 1.3397. The next lines to watch date back to the summer when 1.3420 and 1.3510 played a role in holding GBP/USD down.

Support is at 1.3310, the former double-top, and then by 1.3265, Monday’s trough. Further down, 1.3245 is the next level to watch.

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