- EU & UK reach Brexit deal.
- Talks to enter the second stage.
- GBP offered on confirmation of the Brexit deal.
GBP/USD surrendered gains after news hit the wires that the Europen Union and the UK have reached the historic Brexit deal. The EU said it is ready to begin work on the second stage - Brexit transition after Summitt.
The decline in the GBP/USD pair from 1.3519 to 1.3467 following the confirmation of the deal indicates the markets had already factored-in the good news. Essentially, what we are seeing now in GBP/USD could be a "sell the fact" trade.
Cable may continue to lose altitude as investors take profits on the longs initiated in hope of Brexit deal. Also, comments from UK's May and EU's Juncker could influence the pair. Traders also need to keep an eye on the UK data releases (manufacturing production and trade data). The greenback could catch a bid wave later today, leading to more losses in the spot, if the US wage growth numbers beat estimates.
GBP/USD Technical Levels
A move below 1.3431 (10-day MA) could yield a sell-off to 1.3320 (previous day's low), under which a major support is seen at 1.3243 (50-day MA). On the other hand, a close above 1.3520 (session high) would add credence yesterday's bullish engulfing candle and shall open doors for 1.3596 (Sep. 22 high) and 1.3657 (Sep. 20 high).
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