GBP/USD sits at 2-month tops ahead of key Brexit talks
- Fresh optimism surrounding the Brexit deal propels GBP/USD to a two-month high.
- Brexit talks between the EU's chief negotiator Michel Barnier and UK Brexit Secretary Stephen Barclay will be the key.
- BOE’s quarterly Bulletin, Fed speak, trade headlines can offer intermediate moves.
With the EU lawmakers finally speaking the UK PM Johnson’s lines, the GBP/USD pair takes the bids to 1.2550 while heading into the London open on Friday.
Not only the European Commission President Jean-Claude Juncker’s openness towards alternative solutions to the Irish backstop recently triggered the optimism that the United Kingdom (UK) lawmakers will be able to sign a Brexit deal with the European Union (EU) by the Prime Minister Boris Johnson’s October 31 deadline.
Adding to the sentiment could be comments from the Irish Taoiseach Leo Varadkar that showed readiness to discuss the deal his British counterpart during next week’s United Nation’s (UN) gathering.
On the other hand, the US Dollar (USD) seems to witness downside pressure amid the latest shift in trade sentiments with China. The same could be witnessed in downbeat performance of the US 10-year treasury yields.
Investors will be closely observing details of today’s meeting between the EU and UK’s key Brexit negotiators after the BBC news claimed that the British office has already shared documents showing Irish backstop alternatives with the EU. It should, however, be noted that a final deal is still very far as Irish PM and the UK’s members of the Parliament (MPs) also have a right to interfere and won’t miss that.
Also, the Bank of England (BOE) recently downgraded its growth and inflation forecasts and might follow the suit via its quarterly bulletin. On the other hand, the Federal Reserve policymakers, namely Federal Reserve Bank of New York President John Williams and the Federal Reserve Bank of Boston President Eric Rosengren, are also up for public appearances and could share details of the Fed’s recent hawkish rate cut.
Technical Analysis
GBP/USD buyers need to conquer three-week-old upward sloping trend-line, close to 1.2580 now, in order to aim for 1.2650 and then to 61.8% Fibonacci retracement level of May-September downpour, at 1.2712. In a case, nearly overbought conditions of 14-day relative strength index (RSI) triggers the pair’s pullback below 100-DMA level of 1.2490, 1.2385/80 area including July 17 low and early-September high will be the key to watch.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
