GBP/USD surges above 1.30 on latest Brexit headlines

• British pound gathers strength on Brexit optimism.
• Downing Street confirms a special Cabinet meeting on Wednesday.
• US Dollar Index slumps toward 97 handle.

The latest headlines surrounding Brexit negotiations provided a strong boost to the British pound in the last hour and the GBP/USD pair gained more than 80 pips while the EUR/GBP plummeted  to its lowest since mid-April. As of writing, the GBP/USD pair was up 1.4% on the day at 1.3030.

Citing two well-placed sources,  RTÉ News’ Europe Editor Tony Connelly reported that the  EU and UK negotiators have agreed on a text that deals with the Irish border.  “The backstop will come in the form of a temporary UK-wide customs arrangement, with specific provisions for Northern Ireland, which go deeper on the issue of customs and alignment on the rules of the single market than for the rest of the UK,” Connely wrote. Following this development, Downing Street confirmed that the Cabinet would meet on Wednesday to consider the draft agreement.

Although a spokesman for Ireland’s foreign minister Simon Coveney disputed this report by saying that negotiations have not concluded yet, the pound sterling preserved its momentum.

Today’s Brexit headlines

• EU and UK negotiators agree text for Irish border – RTÉ News.
• UK PM May expected to present draft Brexit deal on Wednesday.
• The Times’ Sam Coates: Business groups to be briefed on Brexit tomorrow.
• BBC’s Kuenssberg: Cabinet to sign off a text of divorce deal tomorrow.
• DUP Spokeswoman: We have to wait to see a deal, our red lines are well known.
• UK: Cabinet will meet at 2pm tomorrow to consider the draft agreement.
• Irish ForMin Spokesman: Negotiations between EU and UK on a withdrawal agreement have not concluded.

With investors’ interest shifting to the British pound, the greenback struggled to find demand and the US Dollar Index, which rose to its highest level of the year at 97.70 on Monday, erased the majority of yesterday’s gains and was last seen down 0.45% on the day at 97.17.

Technical levels to consider

The initial resistance for the pair aligns at 1.3040 (50-DMA/daily high) ahead of 1.3110 (Nov. 6 high) and 1.3175 (Nov. 7 high). On the downside, supports are located at 1.3000/1.2995 (psychological level/100-DMA), 1.2935 (20-DMA) and 1.2850 (daily low).