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GBP/USD’s recovery from 1.3190 stalls right below 1.3300

  • GBP/USD regains lost ground to reach levels right ahead of 1.3300.
  • Upbeat comments from Brexit negotiators buoy the pound.
  • GBP/USD likely to extend past 1.3280 - UOB.

The sterling has traded higher on Friday, extending its rebound from Thursday’s lows at 1.3195 to session highs a few pips shy of 1.3300 where bulls have lost steam. The pair, however, remains steady above 1.3260.

Pound advances on hopes of a Brexit deal

The pound has gained about 0.25% so far on Friday, buoyed by a more upbeat view about the outcome of the Brexit negotiations. European Commission President, Ursula van der Leyden has boosted market sentiment earlier today affirming that she has observed “better progress” over the last days, with more movement on “important files”.

Van der Leyden’s remarks have been confirmed by comments of EU and British representatives, suggesting that the positions are getting closer and that the deal might be imminent.

On the macroeconomic front, UK retail sales have shown a 1.2% monthly increase and a 5.8% year-on-year growth in October. This is the sixth consecutive increase in retail consumption, which proves the resilience of the sector in times of coronavirus and has contributed to increase confidence in the GBP.

GBP/USD extra gains beyond 1.3280 are likely – UOB

The FX analysis team at UOB sees the pound biased higher with room for a further rally past 1.3280: “GBP ‘has to move and stay above 1.3380 within these 1 to 2 days or a break of 1.3160 (no change in ‘strong support’ level) would indicate that GBP is not ready to move above 1.3322’. GBP subsequently dropped to 1.3198 before rebounding strongly to end the day little changed at 1.3265 (-0.02%). Upward momentum continues to wane and unless GBP can maintain a foothold above 1.3280 within these 1 to 2 days, the prospect for a move above 1.3322 would diminish quickly.”

Technical levels to watch

 

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