GBP/USD Forecast: Brexit headlines boosted the pound

GBP/USD Current price: 1.3419

• A trade deal between the EU and the UK could be announced this week.
• The UK Markit Manufacturing PMI came in better than previously estimated at 55.6.
• GBP/USD bullish potential increased with Brexit-related headlines, 1.3481 next resistance.

The GBP/USD pair hit 1.3442, its highest since early September after news indicating that trade talks between the UK and the EU may be at the final stages of a deal. According to the news, the EU's chief Brexit negotiator, Michel Barnier, has stopped internal debriefs to the wider EU after delivering the last one last Friday. An agreement could be announced by the end of the week.  Sources from both UK and EU Brexit teams poured some cold water on the market’s enthusiasm, as one told a Sky reporter that "negotiations cannot become any more intense."

Data wise, Markit released the final version of the November UK Manufacturing PMI, which came in better than previously estimated at 55.6. The UK won’t publish relevant macroeconomic data this Wednesday.

GBP/USD short-term technical outlook

The GBP/USD pair holds on to most of its intraday gains, trading in the 1.3420 price zone. The pair is bullish in the near-term, as the 4-hour chart shows that it’s comfortably developing above all of its moving averages. The longer ones accelerated north below the 20 SMA, which slowly gains bullish traction. Technical indicators have neared overbought reading, losing upward momentum as the day comes to an end. September high at 1.3481 is the level to break to confirm another leg north this Wednesday.

Support levels: 1.3390 1.3340 1.3300

Resistance levels: 1.3485 1.3530 1.3580

View Live Chart for the GBP/USD