GBPUSD hits 3-week high as Brexit talks to nowhere begin

The GBPUSD pair is sitting pretty at a three-week high even as the market braces for confrontation as the final round of Brexit talks start. The pair is trading at 1.2513, which is the highest it has been since May.

UK house price fall amid virus

The economic data from the UK continues to weaken. According to the Nationwide Building Society, the prices of houses declined by about 1.7% in April, which is the biggest decline since the last financial crisis. The index fell by 1.8% from a year earlier.

The weakness of the housing sector was not surprising since the government suspended the housing market at the request of bankers. Also, most people in the country were not buying houses since they were staying at home, following government orders.

Bearish sentiment on GBP rise a Brexit talks begin

The resilience of the British pound (GBPUSD) has surprised many traders. In a statement to Bloomberg, an analyst at TD Ameritrade said that:

“It has been a little surprising, frankly, that the foreign-exchange market has been as willing as it has to give sterling a pass this time around.”

Recent data from the CFTC showed that sentiment among speculators is at the lowest it has been this year. Still, another data that shows the future sentiment on the GBP is at the least negative since March.

According to Bloomberg, this is a sign that investors have started projecting that Johnson will request for an additional time to negotiate the deal. Indeed, as Brexit talks begin this week, most analysts expect the two sides to end the meeting without a deal.

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GBPUSD technical outlook

The daily chart shows that the GBPUSD pair rose today for the fourth consecutive day. It is now trading at 1.2513, which is above the 100-day EMA and slightly below the 61.8% Fibonacci retracement level. The RSI is approaching the overbought level of 70. Therefore, the pair may continue to rise as bulls approach the 61.8% retracement at 1.2713.

On the flip side, a move below 1.2375 will invalidate this trend. This price is along the 50-day EMA.

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