- GBP/USD stays bid near the previous day’s top, the highest level since May 2018.
- Fisheries keep being a tough nut to crack for a soft Brexit, agreement over level playing, governance boosted cable earlier.
- Market sentiment stays mildly positive while waiting for US stimulus.
- BOE to keep monetary policy unchanged, Cable bulls eye hints of no negative rates.
GBP/USD takes the bids near a multi-month high, currently up 0.40% intraday at 1.3540, while heading into Thursday’s London open. The pair jumped to the fresh top since May 2018 the previous day amid positive updates from the Brexit desk. The mood has been intact afterward as the US dollar wavers around the lowest since April 2018 amid upbeat markets.
While policymakers from the UK and the European Union (EU) have already overcome obstacles over the bloc’s market access, fisheries remain as the last man standing the door. Having noted the progress over Brexit talks, UK PM Boris Johnson said, “European Union would ‘see sense’ and agree a post-Brexit trade deal, adding all the bloc needed to do was recognize Britain’s right to sovereignty,” per Reuters.
This becomes the first positive comment from UK PM Johnson after multiple days of signing on the tunes of either Australia-style or Canada-style, even no-deal Brexit.
Markets took it as a positive and propelled the Cable while waiting for today’s Bank of England (BOE) monetary policy meeting.
Elsewhere, US policymakers are haggling over the much-awaited coronavirus (COVID-19) stimulus while vaccine hopes and the US-China tussle combat each other. Even so, fears of hard lockdowns in South of England probe the bulls ahead of the key BOE. Also on the negative side could be signals from UK Chancellor Rishi Sunak relating to the spending cuts and tax hikes in an interview with The Spectator magazine, per The Telegraph.
Against this backdrop, stock futures in the US and the UK remain mildly bid while Asia-Pacific shares stay on the front foot. Additionally, the US 10-year Treasury yields remain in green near 0.92% by press time.
Looking forward, the Bank of England (BOE) is neither expected to alter the benchmark interest rate not the Quantitative Easing (QE) after the last meeting’s action. However, market players will pay close attention to the negative rate talks for fresh impulse.
Read: BOE Preview: Bailey may grant a Christmas gift to pound bulls, assuming no negative rates talk
Technical analysis
The cable rose to the fresh multi-month high the previous day while staying inside an ascending trend channel formation establishes since mid-September. Though, a rising trend line connecting highs marked from September 01 challenges the pair’s further upside. As a result, the GBP/USD prices may witness a pullback unless successfully crossing the immediate resistance line and the upper line of the stated channel, respectively around 1.3545 and 1.3555.
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