GBP/USD rises further after Conservative MP says “'Malthouse compromise” not dead

The GBP/USD rose further late during the US session and printed a fresh 2-week high at 1.3071. Near the end of the day, cable trades at 1.3065, 150 pips above yesterday’s close (the best performance in more than a month) and on its way to the third gain in-a-row. 

The last run higher in GBP/USD took place following comments from UK Conservative Steve Baker. He said the Malthouse compromise is alive after a meeting with UK PM Theresa May. She will meet Jean-Claude Juncker, President of the European Commission, on Wednesday. The pair was already higher on the back of a weaker US dollar and also boosted by renewed Brexit hopes. 

Regarding the greenback, the DXY lost 0.30% and dropped from 96.80 to 96.47, reaching the lowest level in a week. The US 10-year yield fell to weekly lows at 2.634% and then bounced to 2.652%. 

Technical outlook 

“The pair is now above the 61.8% retracement of the 1.3217/1.2772 slide at around 1.3050, up over 100 pips in the American session, resulting in technical indicators reaching extreme overbought readings in the 4 hours chart. Nevertheless, both the Momentum and the RSI maintain their strong bullish slopes, while the price is far above a now bullish 20 SMA and a directionless 200 EMA, all of which favors an upward extension ahead”, says Valeria Bednarik, Chief Analyst at FXStreet. 

She warns that the risk is as always uncertainty surrounding Brexit as failed talks between UK PM May and EC President Juncker could result in the pair giving back all of its recent gains.

GBP/USD Levels