GBPUSD trades to highest level since May (takes out last week's high), but political uncertainty remains ahead

Technical Analysis

Author: Greg Michalowski | gbpusd

Early declines erased...

As Boris Johnson hopes to put his Brexit deal to a vote in Parliament today, the GBPUSD has erased early declines and trades marginally higher.  The government has indicated it will pull the vote if any amendments rendering it "meaningless" are debated. John Bercow, has hinted he may not allow the vote as well.   

Early declines erased...
The GBPUSD moved to a new high since mid-May in trading today - extending above the high from last week at 1.29867.  The price moved to a high price of 1.30116, but the momentum slowed and the price moved back down to 1.2974.  However, more recently, the price has move back above the 1.3000 level, but is having some altitude sickness ahead of the highs and the political uncertainty ahead.  

Looking at the move in October, the hopes for a Brexit deal (or no hard Brexti at least) has taken the price up 817 pips. That is a pretty good run.  

On the hourly chart, the pair sits between a lower trendline that is down at 1.2886 and a topside trend line up at 1.3148. That too is a wide range.  However, given the volatility (and potential volatility) it is not too surprising. The GBPUSD has an average over the last month or so of trading of 137 pips. Today's range is about average at 139 pips so far. 

Taking a broader look at the daily chart below, the price moved above its 38.2% retracement of the move down from the April 2018 high at 1.28816. The low today was just below that level at 1.2874 level.  

Watch that level /area going forward between 1.2874 and 1.28816.  If the price can trade more comfortably below that area today, we could see more downside momentum toward the 1.2783 level over time (high from June). The 200 day moving average is down at 1.27122. That is another key barometer for both bulls and bears.  

Staying on the daily chart, a move higher will look toward the 50% retracement at 1.3167 as the next key upside target. That is also near the May 3 high of 1.31756.

GBPUSD on the daily chart
Right now, the pair is sitting and waiting for the political moves to be played.  

PS the speaker Berkow is about to make a statement in the House of Commons 

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