The Pound is recovering this Friday after falling against the US Dollar. Thursday’s drop followed the cancellation of a round of negotiations as well as downbeat manufacturing data from the UK. A member of the EU delegation contracted the coronavirus, and this clarification allowed the Pound pare some of the losses on Thursday, converting this into a rebound that still lacks buying momentum.
Traders who are bullish on the Pound continue to await a UK-EU post-Brexit trade deal as the Dec. 31 deadline approaches. The exit of Dominic Cummings as a chief adviser to the UK’s PM may have taken a hardliner off the equation, but some key issues surrounding state aid and fishing rights remain unresolved.
The pair is trading higher by 0.16% at the time of writing.
Technical Levels to Watch
Friday’s daily candle has violated the 1.32663 price level. However, confirmation of a break of price above this level requires two successive closing penetrations by daily candles. This opens the door towards the 1.33193 resistance, which is where the highs of Sept. 4, Nov. 11 and Nov. 14 nestle.
Restoration of the uptrend in the GBPUSD requires a break above the Sept. 2 high at 1.34026. Before this happens, 1.33193 has to be taken out by buyers. This move would make 1.34765 a logical upside target, along with 1.36117 (May 14 2018 high).
On the other hand, a lack of follow-through buying could precipitate some offering of the GBPUSD, targeting 1.31754 initially. A breakdown of this level brings 1.30554 into the picture. If the channel’s lower border gives way at this price support, such a move opens the pathway towards 1.29469 and 1.28589, in that order.
GBPUSD Daily Chart