GBP/USD cracks 1.3400, fresh 9-week tops
- DXY corrects lower
- Firmer on Brexit optimism.
- The US prelim GDP, Carney speech and Yellen’s testimony eyed.
After a brief period of consolidation, the GBP/USD pair caught fresh bid-wave and broke higher to regain 1.34 handle, but sellers continue to lurk above the last, keeping further upside limited.
GBP/USD takes-out 1.3400, what’s next?
The spot regained poise and went on to hit the highest levels since Sept. 29 in early Europe, as the European traders hit their desks and reacted positively on the recent FT reports, suggesting some progress has been made on the Brexit talks. Britain agrees to liabilities worth €100bn but will aim to pay less than half - Financial Times
Moreover, fresh selling seen in the US dollar across the board amid weaker Treasury yields also collaborated to the latest leg higher in Cable. The US dollar extends its corrective slide from 3-day tops to 93.27, as the bulls turn nervous ahead of the US prelim GDP data and Fed Chair Yellen’s testimony on the economy due later on Wednesday.
Meanwhile, the pound ignored the North Korean missile test news and latest comments from the BOE policymaker Cunliffe, as the sentiment remains purely driven by the renewed optimism over the Brexit issue, with the Dec 4. Meeting between the UK PM May and EU’s Tusk eagerly awaited.
Looking ahead, besides, the US growth numbers, the focus will also remain on the BOE Governor Carney’s and policymaker Ramsden speech for fresh momentum on the prices.
GBP/USD Technical Levels
According to Karen Jones, Analyst at Commerzbank, “GBP/USD strong recovery from the 20-day ma and cloud at 1.3212/16 has left the market to face 1.3445, the 2014-2017 downtrend. We look for failure and weakness back to the 1.3103 2016-2017 uptrend.
The 1.3103 2014-17 uptrend represents the breakdown point to 1.2830/1.2774, the 38.2% retracement and August low, and the 1.2575 50% retracement.”