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GBPUSD - Moves to 12 Month High at 1.35 as Brexit Talks Approach Deadline

   

 

GBPUSD - Moves to 12 Month High at 1.35 as Brexit Talks Approach Deadline
 
In the last two weeks or so the GBPUSD has moved steadily higher to reach a new 12 month high right at 1.35, after finally breaking through the resistance at 1.3250. In more recent time, the 1.33 level has become key resisting prices and in the last weeks supporting the GBPUSD as it pushed through to the high. For the few weeks prior to the breakthrough, 1.3250 had been offering resistance, as it made a run at this level reaching a two month high, before it was sold off. Its recent push in the last month or so came after the GBPUSD traded around the 1.30 level for several weeks with an increase in volatility. Now that it has moved through 1.3250, it may enjoy some support from this level.

The 1.30 level has played a significant role in the price action of the GBPUSD in the last four months and may be called upon if the GBPUSD drops back through 1.3250. In the last few month or so the GBPUSD has rallied well from a two month low around 1.2650 back up to 1.30 which has resisted prices strongly, before the recent moves higher to 1.3250. Around the lows, the GBPUSD also received support from another key level at 1.2650.

In early September, the GBPUSD fell sharply from the nine month high near 1.35, pushing down through 1.30 which had previously supported price for a few weeks. The resistance level at 1.3250 didn’t offer much support on the way down and then the other key level at 1.30 was also broken through quite quickly. The 1.2650 level did well to support price, and allow it to rally higher and push back above the 1.30 level, and it may be called upon again to provide some support again.

Back in August, the GBPUSD consolidated in a range between 1.30 and a then five month high around 1.3250, after surge higher through two key levels of 1.2650 and 1.30. Just prior to the surge, it was meeting resistance at the key 1.2650 level, remaining within a narrow range consolidating between another key level of 1.25 and 1.2650, whilst enjoying support from the 1.25 level. Therefore it was no surprise that the 1.2650 level has offered some reasonable support in the last few weeks. In late June, the GBPUSD was well supported by another key level of 1.23 allowing it to return to back above 1.25, whilst the 1.25 level had offered some resistance during this time too.

After the delay in Brexit trade negotiations due to a European official involved in negotiations testing positive for the coronavirus, the deadline is now approaching and significant differences remain.  Both parties are attempting to avoid a disastrous exit as the European Union chief negotiator is prepared to travel to London, as there are now only weeks until the United Kingdom’s exit on 31st December.  The three main issues that remain contentious are the method to resolve disputes in the future, state aid and fishing.  “Clearly there are substantial and important differences still to be bridged but we’re getting on with it,” British Prime Minister Boris Johnson told the media.  “The likelihood of a deal is very much determined by our friends and partners in the EU - there’s a deal there to be done if they want to do it.”  The EU chief negotiator Michel Barnier will be travelling to London today to meet with Britain’s chief negotiator David Frost.  “Same significant divergences persist,” Mr Barnier said.  Neither side appears keen to compromise on the three main issues remaining.  “It is late, but a deal is still possible, and I will continue to talk until it’s clear that it isn’t,” Mr Frost said.

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The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice. If such information is acted upon by you then this should be solely at your discretion and Valutrades will not be held accountable in any way.

This post was written by Graeme Watkins

CEO Valutrades Limited, Graeme Watkins is an FX and CFD market veteran with more than 10 years experience. Key roles include management, senior systems and controls, sales, project management and operations. Graeme has help significant roles for both brokerages and technology platforms.

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