Throughout August the GBPUSD was able to consolidate and receive solid support off the 1.20 level, allowing it to stop the rot and take a breather from its drastic falls from earlier in the year when it was trading above 1.33.
In late July, the GBPUSD fell heavily from 1.24, although it had been declining for several weeks after falling through the key 1.27 level. It was only at the end of June that the GBPUSD reached a one month high near 1.28 before its steady but strong decline in the time since. The sterling has been attracted to the 1.27 level around that time as the GBPUSD had been content to trade very little and consolidate right around this level. Again, this level may offer some resistance should the GBPUSD rally higher.
Significantly through most of May, the GBPUSD fell sharply from the key level at 1.32 down to the five month low before the recent consolidation around 1.27 and fall down to 1.25. Earlier this year it was trading strongly above the 1.32 level and looking poised to push through 1.34 and attempt to regain a lot of lost ground from previous years. There are few signs of any support presently and even if it does rally a little, it faces possible further resistance at the 1.27 and 1.32 levels again.
As the Brexit deadline looms large, jostling continues to secure a Brexit deal offer for the European Union. Up until this point, the major sticking point has been the ‘Irish backstop’ and under the PM’s plan, this would attempt to avoid a hard border between the UK's Northern Ireland and the Republic of Ireland. The plan would see Northern Ireland taken out of the EU's customs union. However, in the last 24 hours, the British Prime Minister Boris Johnson met with Leo Varadkar for further Brexit talks, with reports coming out of a very positive dialogue. “The Prime Minister (Johnson) and Taoiseach (Varadkar) have had a detailed and constructive discussion,” the joint statement said. “Both continue to believe that a deal is in everybody’s interest. They agreed that they could see a pathway to a possible deal.” Building a physical border between Northern Ireland and the Republic of Ireland would be a significant project and would contravene a peace treaty, known as the Good Friday Agreement.
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