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  • GBP gathers strength on reports pointing to a draft Brexit deal on Tuesday.
  • GBP/USD surges to its highest level since May near 1.2800.

Citing two European Union (EU) officials on Tuesday, Bloomberg reported that the United Kingdom and the EU were closing in on a draft deal Brexit deal that could be completed before the end of the day on Tuesday and provided a strong boost to the British Pound.

Reflecting the broad GBP strength, the GBP/USD pair rose to its highest level since mid-May at 1.2799. However, British Prime Minister Boris Johnson’s spokesman in the last minutes noted that there was still more work to be done in Brexit talks and caused the pair to pull away modestly from its highs. Similarly, the EUR/GBP pair seems to have found support 0.8625. As of writing, the pair was down 1.25% on the day at 0.8635.

Reporting on the latest developments, “It is understood that the negotiating teams have agreed in principle that there will be a customs border down the Irish Sea. The arrangement was rejected by Theresa May as a deal that no British prime minister could accept,” the Guardian wrote.

Now markets are waiting for an official confirmation of a draft deal.

Technical levels to watch for