GBP/USD contained above 1.3200 support area, returns above 1.3250

• GBP/USD’ reaches 1.3260 and turns positive on the day.
• Brexit fears are keeping pound longs in check.
• GBP/USD still looking to 1.3300 and beyond – UOB.

The sterling has erased previous daily losses, after bouncing up at 1.3200 area, returning to the1.3260 area and turning positive on the day as the US dollar recovery losses momentum.

Brexit fears are capping GBP longs

The pound seesawed on Thursday’s Asian and European trading sessions, testing support at 1.3200, after The Times newspaper reported that Macron and other EU leaders urged the European Commission to publish no-deal plans as the December 31 deadline approaches.

Beyond that, the risk-off sentiment triggered by the downbeat news about 250,000 COVID-19 death toll in the US, and the increasing number of contagions reported by Japan and Russia has added negative pressure on the risk-sensitive pound.

The US dollar appreciated across the board during the Asian and European sessions, before losing steam on the US trading hours. This has favoured a GBP recovery from session lows at 1.3200 reaching 1.3260 to turn green on daily charts.

GBP/USD still looking to 1.3300 and beyond – UOB

The FX analysis team at UOB remains positive about the pound and does not discard a bullish extension towards 1.3322: “GBP rose to a high of 1.3312 yesterday (18 Nov) before dropping back down to close at 1.3268. Shorter-term momentum has deteriorated and the prospect for a GBP to move clearly above 1.3322 has diminished. In order to revive the current flagging momentum, GBP has to move and stay above 1.3380 within these 1 to 2 days or a break of 1.3160 (no change in ‘strong support’ level) would indicate that GBP is not ready to move above 1.3322.”

Technical levels to watch