GBP/USD analysis: EU ready to offer the UK a trade deal, Pound soars

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2996

Barnier's comments are a game changer for Sterling, particularly in a weak dollar's environment.
Details on Barnier's "never seen deal," not out yet.

EU's Chief Brexit Negotiator, Michel Barnier sent the Pound skyrocketing and the GBP/USD pair up to 1.3014 it highest since August 6, after announcing that the EU is close to offering the UK a deal, "such as has never been with any other third country." He also clarified that the single market means exactly that, single market and that the UK must respect core EU structures. Leaving the UK inside the single market "is not negotiable," according to Barnier. Nevertheless, the announcement was enough to bring relief after fears of a no-deal depressed the Pound to yearly lows against major rivals. Another positive sign came from German Foreign Minister, who claimed that the country is striving for an ambitious an close partnership with the UK, cohesive with EU rules. Furthermore, Brexit Minister Raab said that a deal is "within our sights." Things look much brighter than 24 hours ago, and indeed these headers are a game changer for the Sterling, which may continue appreciating particularly if the USD remains weak. The 4 hours chart for the pair shows that it has broken through the 200 EMA for the first time in more than two months with a strong volume candle, usually a sign of further gains ahead. In the same chart, the price is now well above a bullish 20 SMA, which converges with the 61.8% retracement of the 2016/2018 bullish run at around 1.2890, while technical indicators are trying to stabilize in overbought readings. The pair has now a strong resistance at around 1.3045 where it met sellers on August 3, with gains beyond the level favoring an extension up to the 1.3080/90 region.

Support levels: 12970 1.2935 1.2900

Resistance levels: 1.3015 1.3045 1.3085

View Live Chart for the GBP/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

AUD/USD consolidates above 0.7200 after hot Chinese CPI data

AUD/USD is extending its consolidative price action above 0.7200 during the Asian session on Wednesday, uninspired by hot Chinese CPI and PPI data. Meanwhile, rising RBA rate-hike bets act as a tailwind for the Aussie amid Yen-inspired US Dollar weakness. Traders await the release of US inflation figures later in the week for fresh impetus.

USD/JPY stays weak near 153.50 amid aggressive BoJ hike bets

USD/JPY attracts fresh sellers in the Asian session on Wednesday as the strong Reuters Tankan business survey adds to the case for continued BoJ policy normalisation and boosts the Japanese Yen. This, along with a broadly weaker US Dollar, keeps the pair close to a nearly seven-month low set on Tuesday.

Gold rebounds from $4,350; will it last?

Gold is rebounding from a one-week low near $4,350 in the Asian session on Wednesday. The US Dollar, however, struggles to lure buyers amid a rallying Yen, supporting the commodity as traders await the key US inflation data for a fresh impetus. However, the rebound could be short-lived amid expectations of a Fed rate hike this month.

Inflation risks keep interest rates high

The ongoing conflict in the Middle East and resulting disruptions in the energy markets are driving up inflation expectations and keeping upward pressure on bond yields high. In the Eurozone, heightened inflation risks and robust growth in economic demand point to another ECB rate hike to 2.5% in September.

Gold and stocks: What eight midterm elections did

I went back through every midterm election since 1994 and asked one question of each: when did the stock market make its low for the year, before the vote or after it? In seven of the eight cycles, the low came before the election. In six of the eight, it came between mid-June and mid-October, which is to say in the exact window that the "they won't let it fall" argument says is protected.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.