The British pound is up sharply on Wednesday. Currently, GBP/USD is trading at 1.3524, up 1.21% on the day.
Is a Brexit deal imminent?
The volatility continues for the British pound. After three straight days of losses, GBP/USD has reversed course in an impressive manner, posting gains of over one percent. The pound started its upward move in the European session, after reports that a Brexit deal could be sealed as early as Thursday. EU sources said that UK Prime Minister Johnson and European Commission President von der Leyen were putting the final touches on an agreement, which comes after months of difficult and often acrimonious negotiations between London and Brussels. The sides have apparently come to an agreement on all issues except fishing access for EU fleets in British waters, and a compromise is expected on this final obstacle to a Brexit agreement.
As the Brexit talks go down to the wire, the financial markets have reacted to every whiff of any new development or comments from European or British officials. This has taken the pound on a roller-coaster ride. After a Sunday deadline by EU lawmakers was missed, pessimism grew and the pound fell as low as 1.3187. With the encouraging news today about a deal being close, the pound has shot up, punching over the 1.35 level. For months, the markets have priced in a Brexit deal being reached, so sterling was vulnerable to a sharp downturn in the event that the sides failed to reach an agreement. Now that a deal appears imminent, there is still some upside for the pound.
- GBP/USD tested resistance at 1.3548 in the European session. This is followed by resistance at 1.3626
- There is support at 1.3294. Below, we find support at 1.3216
- GBP/USD broke above the 20-day MA in the North American session, which is a sign of an upturn in the pair