GBP/USD Forecast: Bulls lead on Brexit talks progress

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GBP/USD Current price: 1.3293

  • Brexit talks are making “better progress,” according to EU´s Ursula von der Leyen.
  • UK Retail Sales beat expectations in October, but services output seen collapsing in November.
  • GBP/USD is technically bullish, it could accelerate its advance once above 1.3320.

The GBP/USD pair has advanced for a third consecutive week, finishing the last one a handful of pips below the 1.3300 threshold. Turmoil in the US has kept the dollar under pressure, while the pound was underpinned by Brexit hopes. Talks between the UK and the EU were disrupted after an EU negotiator tested positive for coronavirus but resumed virtually shortly afterwards. European Commission president Ursula von der Leyen said on Friday that “better progress” was made, although she added that “there are still quite some metres to the finish line.”  Market talks suggest that an announcement could be made this week.

The UK currency found further support in October Retail Sales figures, which were up 1.2% MoM and 5.8% YoY in October, beating expectations and posting gains for the sixth consecutive month. Markit will publish the preliminary UK November PMIs. Manufacturing activity is seen contracting from 53.7 to 50.5 while services output is expected at 42.5 from 51.4 in the previous month.

GBP/USD short-term technical outlook

The GBP/USD pair is bullish, according to the daily chart, as it is developing above bullish moving averages, as technical indicators advance within positive levels, with limited strength. In the 4-hour chart, the pair offers a neutral-to-bullish stance, as the Momentum indicator remains stuck to neutral levels, while the RSI advances around 61. A bullish 20 SMA provides dynamic support, currently at 1.3260. A steeper advance could be expected on a clear break above 1.3320.

Support levels: 1.3260 1.3210 1.3165  

Resistance levels: 1.3320 1.3365 1.3410

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