GBP/USD: Bulls rallied around 2% on Brexit breakthrough hopes


  • GBP/USD into the 1.24 handle on Brexit hopes and signs of a breakthrough.
  • Irish Taoiseach Varadkhar and UK PM Johnson, Varadkhar is now set to meet EU’s chief Brexit negotiator Barnier and other key EU stakeholders on Friday.

GBP/USD rallied around 2% on Brexit breakthrough hopes and is currently trading t 1.2434 having travelled from a low of 1.2200 to a high of 1.2469, +1.86%. Irish PM Leo Varadkar says a Brexit deal is possible following a three hour meeting with UK PM Boris Johnson. There have been no specific updates on subject matter from the talks but the UK Minister Gove said that the meeting was cordial & constructive and both sides say ‘good progress' was made. 

"However, its quite some turnround after earlier comments from the EU. A press statement released says their discussions concentrated on the challenges of customs and consent but gave little away as to exactly what concessions had been made regarding Northern Ireland in order to get to this position. Varadkar says the talks were at a ‘very sensitive stage’ but were ‘very positive and promising’," analysts at ANZ Bank explained. 

Following these last-ditch talks between Irish Taoiseach Varadkhar and UK PM Johnson, Varadkhar is now set to meet EU’s chief Brexit negotiator Barnier and other key EU stakeholders on Friday and UK’s Brexit Secretary will also meet with Barnier and his negotiating team and GBP is higher as markets have the sense that they may have rekindled potential for compromise. 
However, as analysts at Westpac point out, "whether there is time to create the foundations for any form of agreement into next week’s (17th-18th) EU Leader’s Summit so that it can be debated at UK Parliament’s special sitting on 19th is still a distant hope."

Brexit: What now? 

The analysts at Westpac explained that three options seem possible for tomorrow:

  • Foundations for compromise towards forming a deal may be found.
  • Agreement to call an end to negotiations until UK gains a clearer workable mandate (elections).
  • Failure to progress and negotiations are ceased. Critical will be whether the cessation is acrimonious or not.
  • "The initial option would be a surprise and provide a clearly risk positive stance into next week. However, there would likely still be an enormous amount of discussions needed to clarify details for a potential deal that would need an extension of the current Brexit deadline."
  • "The second option would lead to what has recently seemed to be the most likely outcome and that then the Brexit deadline is extended to allow for UK to hold elections. The problem then would be whether a working majority (very slim) or coalition can be found to proceed with new negotiations."
  • "If the third option is acrimonious, steps to avert an extensions could result in a market unfriendly disorderly Brexit."

As for trade talks between the US and China, news that Trump will meet Chinese Vice Premier Liu today lifted spirits.  Liu and top US trade negotiators, Steven Mnuchin and Robert Lighthizer met to talk, which is the first time the two sides have met since July. Trump announced he will meet with Vice Premier tomorrow at The White House.

GBP/USD levels

GBP/USD

Overview
Today last price 1.2444
Today Daily Change 0.0239
Today Daily Change % 1.96
Today daily open 1.2205
 
Trends
Daily SMA20 1.2369
Daily SMA50 1.2256
Daily SMA100 1.2415
Daily SMA200 1.2716
 
Levels
Previous Daily High 1.2292
Previous Daily Low 1.2197
Previous Weekly High 1.2414
Previous Weekly Low 1.2205
Previous Monthly High 1.2583
Previous Monthly Low 1.1958
Daily Fibonacci 38.2% 1.2233
Daily Fibonacci 61.8% 1.2256
Daily Pivot Point S1 1.2171
Daily Pivot Point S2 1.2136
Daily Pivot Point S3 1.2075
Daily Pivot Point R1 1.2266
Daily Pivot Point R2 1.2327
Daily Pivot Point R3 1.2361

 

 

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