- GBP/USD is ticking higher on reports that Brexit will be postponed.Â
- A delay in the vote in parliament and a delay in the US-Chinese trade talks’ deadline have an impact as well.
- The technical picture remains positive for the pair.
GBP/USD is trading close to 1.3100, up on the day. There are various reports on Brexit that help the pair.
1) Potential extension of Article 50
The UK and the EU are considering delaying the UK’s exit from the European Union. It is harder for the UK government to deny the rumors. Both sides mull a technical extension of two or three months, allowing the European Parliament to convene in July without UK MEPs, as initially planned.
However, there are also reports of a 21-month extension to 2021. Markets are taking such an extension with a big grain of salt at the moment, but if such a move is confirmed, GBP/USD could surge.
2) Delay in the Brexit vote
PM Theresa May is in Sharm Al-Sheik, Egypt, for an EU-Arab World Summit. On the sidelines of the event, she said that the government needs more time to negotiate and will bring the “meaningful vote†to the House of Commons only on March 12th, 17 days before Brexit Day.
The shorter deadline may push MP’s to vote in favor of the deal and markets like it. A vote this week was due to fail.
3) Delay in US-Chinese trade talks
The US and China have made enough progress in trade talks to allow for an extension of the negotiations beyond the March 1st deadline. President Donald Trump will not push for new tariffs on the world’s second-largest economy and may meet Xi Jinping, his Chinese counterpart, in late March.
The news pushed stocks higher and the US Dollar lower.
BOEÂ Governor Mark Carney speaks today, but he is unlikely to move the pound too much with Brexit in the limelight. PM May meets Irish PM Leo Varadkar in Egypt, and may also have private talks with other European leaders. Expectations for a breakthrough are low.
GBP/USD Technical Analysis
GBP/USD trades above the 50 and 200 Simple Moving Averages on the four-hour chart and Momentum remains positive. Moreover, the Relative Strength Index is above 50 but below 70, serving as another bullish sign.
Resistance awaits at 1.13110, a high point last week and the highest since late January. 1.3160 is the next cap after holding cable down in late January. 1.3215 was a peak in mid-January and is the next cap.
Support awaits at 1.3045 which was a stepping stone on the way up late last week. 1.3010 was a swing low last week, and 1.2970 is where the 200 SMA meets last week temporary trough.
