Oversold GBP has picked up a bid on reports the UK is ready to stay in customs union beyond 2021.
Currently, GBP/USD is trading above the 200-day MA, needs to break above 1.3618 (May 10 high) to confirm a bottom.
GBP/USD is on the rise and trading above the 200-day moving average of 1.3556, courtesy of reports that the UK is willing to stay in the customs union beyond 2021.
The Telegraph reported earlier today that Britain is set to tell Brussels it is prepared to stay in the customs union beyond 2021 as Prime Minister May’s cabinet remains split over the kind of future customs system London should seek with the bloc.
So far, we have not heard of any response from the EU. Further, there is still plenty of Brexit uncertainty in the air. Nevertheless, the oversold GBP is buoyed by the news of customs deal.
As of writing, the pair is trading at 1.3562. The 5-day moving average (MA) and the 10-day MA are beginning to rise in favor of the GBP. Further, the 14-day relative strength index (RSI) is rising from the oversold territory, having created a bullish divergence over the last 12 days.
So, GBP could rise further towards the key resistance at 1.3618 (May 10 high). A close above that level would confirm a short-term bullish reversal.
GBP/USD Technical Levels
The immediate resistance is seen at 1.3618 (May 10 high) ahead of 1.3712 (March 1 low) and 1.3765 (Feb. 9 low). On the downside, support is seen at 1.3529 (5-day MA), 1.3483 (Asian session low) and 1.3451 (May 15 low).
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