Breaking: GBP/USD leaps to 1.2750 on reports of a draft Brexit deal

The EU and the UK are reportedly closing on a draft Brexit deal. The draft heavily depends on the support of the Democratic Unionist Party (DUP) for the accord.

Bloomberg is reporting from sources "with knowledge of the talks." An official announcement is still awaited. 

Analysis: Brexit: Five outcomes and GBP/USD reactions as a deal may become real

GBP/USD has surged to a new cycle high of 1.2755 before ticking somewhat lower. High volatility prevails. Cable is now trading at the highest levels since June 25. The Relative Strength Index on the four-hour chart is flirting with 70 – representing overbought conditions. Other indicators are positive, with robust upside momentum.

The next resistance line is 1.2780, which capped GBP/USD in June. If sterling moves above that level, it will hit the highest since May. 

Here is how the move looks on the chart. Click on the image to see a live GBP/USD graph:

Prime Minister Boris Johnson held a 90-minute long meeting with Arlene Foster, head of the DUP, on Monday. Reports from that encounter suggested that Foster had issues with some of the topics.

Earlier today, Chief EU Negotiator Michel Barnier received new proposals from Britain, and reportedly commented that they were not satisfactory. Other officials noted that progress was made, but "too slow." The EU gave the UK until tonight to reach an accord that would be ready for for the EU Summit on Thursday. Talks continue in Brussels.