GBP/USD advances to fresh 2-week highs above 1.32 on USD weakness & Brexit headlines

• EU’s Barnier says a deal could be reached next Wednesday.
• US Dollar Index falls below 95.50.
• Monthly PPI rises 0.2% in the U.S. to match expectations.

The GBP/USD pair extended its move north in the second half of the day and touched its highest level in two weeks at 1.3210 as latest Brexit headlines provided a boost to the pound sterling. As of writing, the pair was trading at 1.3195, adding 0.4% on a daily basis.

The EU’s chief Brexit negotiator, Michel Barnier recently said that 80-85% of the terms on an orderly Brexit deal were agreed upon and added that it could be possible to finalise an agreement by next Wednesday, October 7. “We need to agree on governance, geographical indications, and Irish border,” Barnier added. Earlier today, Reuters reported that negotiators would try to reach a deal via direct talks as the EU was no longer expecting a new proposal on the Irish border solution.

On the other hand, the sharp fall seen in Wall Street weighed on the market sentiment and forced the US 10-year T-bond yields reverse their gains to make it difficult for the greenback to cling to its daily gains. The US Dollar Index, which rose to the 95.80 area earlier in the day, was last seen down 0.22% on the day at 95.45. The data from the U.S. on Wednesday showed that the PPI rose 0.2% on a monthly basis in September to match analysts expectations. However, the annual rate eased to 2.6% to fall short of the market estimate of 2.8%.

Technical levels to consider

The immediate resistance for the pair aligns at 1.3210 (daily high) ahead of 1.3275 (Sep. 21 high) and 1.3630 /Jul. 9 high). On the downside, supports are located at 1.3135 (daily low), 1.3055 (100-DMA) and 1.3000 (psychological level).