Technical Analysis – GBPUSD skyrockted close to 1000-pips since its lowest level in August

GBPUSD received strong bullish momentum,
breaking through a few resistance zones easily. Price action is currently
testing a support-turn-resistance near psychological level 1.2900 from April
this year. A breakout above that level will send the pair to check its next
resistance zone 100-pips from here.

In terms of indicators, 18EMA bullish
crossover the 50EMA providing upward confirmation for the pair. MACD, biased
bullish while indicating strong bullish momentum as well further supports the
rally. Though the current resistance level is expected to be broken, a recent
hike may suggest a short-term technical retrace before furthering the gains for
GBPUSD.

From the fundamental point of view, the
cable received tremendous upward, rallying for more than eight trading days
with Brexit news dominating the market. The cable started its rally after PM
Johnson and Irish counterpart Leo Varadkar agreed that there is a pathway
towards a possible deal, followed by compromises between E.U. and U.K.
negotiators, which allowed them to come close to drafting out an agreement. As
of 17 October, PM Johnson succeeded in achieving a deal with E.U. negotiators,
which will be presented in front of the European Council during the 2-days
meeting on October 18 & 19.

However, even with a deal agreed upon,
uncertainties remained after Northern Ireland Democratic Unionist Party (DUP)
stated that they will not back the agreement, which would still require N.I to
stay in a customs union with the E.U. after Brexit. After the E.U. summit
meeting, Johnson will be expected to bring the deal back to its Parliament for
final voting. The question is whether or not the deal will receive majority
approval from the Parliament. Failure to obtain the consent will lead to higher
possibilities for the of Article 50.