GBP/USD: Bulls move up to key resistance, 38.2% Fibo, ahead of UK Parliament returning
- GBP/USD climbed on Friday despite the risks ahead associated with the Brexit vote this month.
- GBP/USD is currently trading at 1.2703, steady in early Asia ahead of the Tokyo open.
GBP/USD jumped through the 23.6% Fibo at 1.2602 and pierced the 38.2% Fibo of the late Sep decline, ending NY +0.73% at 1.2730 having traded within the North American range of between 1.2744-1.2617 despite an outstanding nonfarm payrolls number. The price action followed the UK service PMI beat, 51.2 vs 50.7 f/c and Fed's Powell's comments that were taken as less hawkish for future Fed hikes.
Brexit risks in focus
Looking ahead, and judging by December's Services PMI that although surprised to the upside, rising nearly a point to 51.2, what was key was that firms noted that Brexit concerns weighed on business-to-business sales in the month and that consumer demand remained subdued. We have a testing time for sterling traders as we head deeper into the New Year and the Brexit vote around the corner with Parliament returning from Christmas recess today. "The final Budget vote is Tues, with some Remainers plotting to frustrate a no-deal Brexitvia amendments. Debate re-starts on the "meaningful vote" on Wed (the vote itself is 15/16 Jan), and the EU might offer a (relatively minor) tweak to assuage deal sceptics, but they'd rather wait until the vote fails to offer changes," analysts at TD Securities explained.
Valeria Bednarik, Chief Analyst at FXStreet, explained that the daily chart for the pair offers a mildly positive technical stance:
"It closed Friday above its 20 DMA, as technical indicators bounced from around their midlines, lacking, however, enough momentum to confirm an upward extension in the upcoming sessions. In the 4 hours chart, the pair settled a couple pips above its 200 EMA and well above a still bearish 20 SMA, while technical indicators entered positive ground, although the RSI lost its upward strength around 59, indicating that buying interest is still limited above the 1.2700 mark."