GBP/USD technical analysis: monitoring Brexit developments
Positive developments in the future of Brexit during last week's trading contributed strongly to the strong bullish move for the GBP/USD, reaching the 1.2353 resistance level with gains of 1.05%, the highest in more than a month, and closed the week's trading around the 1.2285 resistance level. Expectations are that the pair may complete the rally this week as well, confirming that it will continue to be affected by any new Brexit developments. The two currencies are on an important date this week with a batch of important economic data which will also have an effect on the pair's performance.
The 4-hour chart, used to determine short-term expectations, which includes this week, shows how the pair reached a bottom at the September 3rd lowest price at 1.1958, and from there began a new uptrend. Although the exchange rate fell by the end of Friday's trading, the decline was somewhat limited, indicating a good opportunity to resume the upside. A break of 1.2353 will trigger a bullish move to the 1.2500 target, a psychological resistance level. Meanwhile, the weekly chart shows that the pair is still in a downtrend despite recent gains. The RSI looks constructive after rising relatively strongly from an oversold territory.
The future of Brexit is expected to continue to impact more than the economic data. British Prime Minister Boris Johnson is seeking another parliamentary approval for early general elections, but he needs two-thirds of the vote to reach his goal, which seems unlikely. He suffered a setback amid the opposition alliance that the country will not leave by Oct. 31 without an agreement. If Johnson fails to have the vote on the election before October 31, the chances of the country leaving the EU without a deal will be severely diminished, providing stronger support for the pound.
On the economic front: No major US economic data is expected today and the pair's path will be affected by the release of US jobs figures and comments by Federal Reserve Governor Jerome Powell at the end of last week. From Britain, the country's gross domestic product (GDP), along with the rate of industrial production, trade balance of goods and industrial production, will be announced.
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