GBP/USD downside contained at 1.3320, returns above 1.3350

• GBP/USD’s rejection from 1.3400 finds support at 1.3320.
• Pound rally falters on Brexit uncertainty.
• GBP/USD is now focusing on 1.3480 – UOB.

The sterling has been rejected on its first attempt to break 1.3400 on Thursday’s early trading and the pair retreated to session lows at 1.3320 where it has found support to return to the mid-range of 1.3300.

Brexit uncertainty hurts the GBP

The pound is losing ground on a thinned Thanksgiving session, retreating from 12-week highs after having rallied in eight out of the last nine trading days. The lack of progress on the Brexit negotiations is undermining GBP bulls while the talks continue in an attempt to bring positions closer in key issues.

The positive sentiment witnessed over the previous weeks was hit on Wednesday after the European Commission president, Ursula van der Leyden, warned that the trade deal is far from certain as UK’s position in the fishing issue us blocking the agreement.

Today, UK finance minister, Rishi Sunak, affirmed that he was confident and hopeful about a post-Brexit deal, although the impact on the pound was muted. The market is awaiting more solid reasons to back the GBP uptrend.

GBP/USD focusing on 1.3480 – UOB

The FX Analysis team at UOB remains bullish on the pair, expecting further rally towards 1.3480: “GBP rose to 1.3394 yesterday before closing at 1.3386 (+0.19%). Momentum is beginning to improve and a break of 1.3400 would shift the focus to the year-to-date high at 1.3481 (there is a minor resistance at 1.3440). All in, the outlook for GBP is deemed as positive as long as it does not move below 1.3280 (‘strong support’ level previously at 1.3250).”

Technical levels to watch