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

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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.

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