Saturday, April 21, 2018
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GBP/USD: Bullish outside day, eyes Brexit trade talks
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  • Cable created a bullish outside day candle on Thursday, the bullish outlook strengthens. 
  • EU, Britain to start trade talks next week.

The GBP/USD created a bullish outside day candle on Thursday – rose from 1.4145 to 1.4247 engulfing the price action seen on Wednesday.

The bullish outside day put to rest fears of bullish exhaustion as suggested by Wednesday’s doji candle and adds credence to the ascending (bullish biased) 5-day moving average (MA), 10-day MA and 21-day MA.

Also, Trump’s (positive) U-turn on Syria crisis and trade seems to have put a bid under the risk assets. So, the pair looks set to re-test the January high of 1.4345.

Focus on Brexit trade talks

The UK and the European Union will start talks next week on their trade relationship after Brexit. As of now, the two sides stand divided on the key issues. The EU has rejected the UK’s proposals as cherry picking the best bits of EU membership and the UK says the EU is being too inflexible, according to Bloomberg. The British Pound could set new yearly highs next week if the trade talks begin on a positive note. On the other hand, signs of stress could derail the Sterling rally.

GBP/USD Technical Levels

As of writing, the pair is trading at 1.4235. A clear break above 1.4245 (March 26 high) would set the tone for a re-test of 1.43 (psychological hurdle) and 1.4345 (Jan. 25 high). On the downside, breach of support at 1.4188 (5-day MA) would expose 1.4120 (10-day MA) and 1.4097 (21-day MA).

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