GBP/USD in Rally Mode after EU-UK Brexit Presser

Matt Weller
By :  ,  Head of Market Research

The constant trickle of Brexit headlines continues to drip out, with today’s developments taking on a relatively positive tone.

While the two chief negotiators, Michel Barnier and Dominic Raab, still acknowledged the potential for a no-deal / “hard” Brexit, they noted that negotiations were in their final stage and will occur continually from now on. Perhaps most importantly, EU negotiator Barnier suggested that the October deadline for agreeing to a Brexit deal could be extended slightly. The EU’s willingness to extend the previous deadline suggests that a mutually acceptable deal may be near, though the Northern Ireland border remains a difficult sticking point.

In any event, traders are viewing the recent developments favorably, with pound sterling rising against all but one of its major rivals on the day (New Zealand’s kiwi being the lone exception). Technically speaking, GBP/USD is trading up by more than 250 pips off last week’s lows. Today’s price action so far has created a bullish “marubozu” candle, signaling strong buying pressure and pointing toward a likely continuation as we head into the middle of the week.

Though the near-term momentum sits firmly with the bulls, the longer-term bearish trend remains intact. The next levels to watch this week are previous-support-turned-resistance around 1.2960, potential psychological resistance at 1.30, and if those levels break, the three-month bearish trend line near 1.3100.

GBPUSD

Source: TradingView, FOREX.com


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