GBP/USD has a great day as Haldane comments and Brexit hopes boost the pound

• GBP/USD trades 0.44% higher as Brexit news boosts the price.
• Next stop the psychological 1.30 level which has been tricky in the past.

Fundamental backdrop

Cable has been moving higher on Wednesday as the latest headlines out of the Brexit negotiations are positive. It was early on in the EU session when EU’s Cheif Brexit Negotiator Barnier lifted hopes of Brexit deal amid new ‘buzz’ in talks (reported by the Express). This is in stark contrast to what usually happens after Brexit talks as there is normally a flurry of negative comments.

It was then the Bank of England’s Cheif Economist’s (Andy Haldane) turn to rock the pound as he stated that none of the conditions for negative rates had been met. He went on to comment that any decision on the policy would depend on cost-benefit analysis and that this could potentially take months. Lastly, Haldane went on to say that the BoE is committed to keeping borrowing costs at low levels and the economy has recovered faster than anyone had expected. 

GBP/USD 1-hour chart

The hourly chart below shows the extent of the pound rally. The pair looks set to hit 1.30 and there is a firm-level marked in blue in very close proximity. The level has been tested seven times in just two months and its fair to say there could be a reaction there. 

The indicators have now turned positive as the MACD histogram is green and the signal lines are above zero. The Relative Strength Index is above 50 and looks like it could be heading to the overbought zone.

Away from the resistance level mentioned above. There is a stronger one marked by the red rectangle. This zone confluences with the 61.% Fibonacci retracement level and might by sticky should the price get that high. If there is more positive Brexit news to come by the end of the week it would be hard to rule that out.

Additional levels