- GBP / USD has fallen back below 1.3500 on the back of a slight pullback in previous Brexit optimism.
- But the tone of the trade remains broadly positive and the GBP remains the top performing major currency.
El GBP/ USD retraces below 1.3500 level ahead of FOMC monetary policy announcement Wednesday (at 19:00 GMT), apparently affected by a combination of a slight setback in previous Brexit optimism which had driven the pair to new yearly highs above 1.3550. The close of the session in London could also explain part of the recent decline, but the pair remains quite well supported above 1.3450 for now. At the time of writing, the pair remains positive on the day around the 1.3470 level and is the top performing major currency on the day.
Brexit news bombardment continues
Another day, another bombardment of Brexit news inducing roller-coaster price action in GBP / USD. Late on a European morning on Wednesday, the pair has seen a rise after a BBC reporter reported that the UK had accepted the idea of ”managed divergence” in exchange for preferential access to the single market (This implies that the UK agrees that it will risk punishment through EU tariffs if it diverges from EU rules.) The journalist pointed out that the mechanism by which to judge whether there is an unfair advantage or not has not yet been agreed, but the EU has accepted that it cannot take unilateral action through “lightened tariffs.” Soon after, The Spectator has reported that the British Prime Minister, Boris Johnson, seems a bit more optimistic about the prospects of a deal being reached.
The optimistic Brexit updates pushed GBP / USD above its previous yearly high of 1.3539 and even surpass the 1.3550 level, though the gains were short-lived amid a setback in growing optimism. A spokesman for the British minister said an agreement would most likely not be reached. and that, although progress has been made, large gaps still exist. In addition, a news item from RTE tweeted that, while a common area for a level playing field and state aid is in sight, both parties still have a long way to go and talks on fisheries remain very difficult.
GBP / USD supported on December 9 high
He GBP/USD remains well supported after bouncing off the December 9 high near 1.3480. If this level breaks down, the next key support zone will be Monday’s high just below 1.3450. Lower they await the 21-day SMA at 1.3350 and weekly lows just below the level of 1.3300. Looking up, the first level to note is Wednesday’s high, just above 1.3550.
GBP / USD 4 hour chart
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