GBP/USD: Solace for bulls on Brexit headline; Spike likely short lived (Pressured below 1.3170/90)
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GBP/USD: Solace for bulls on Brexit headline; Spike likely short lived (Pressured below 1.3170/90)

  • GBP/USD has rallied, knocking the DXY down a peg as the third largest component of the index.  
  • Brexit headlines are dominating, as per usual; The latest being ‘EU falling short of UK demands but said to make a new offer’ with respect to the ongoing backstop negotiations into the eleventh hour.
  • GBP/USD is currently trading at 1.3127, up from the session low of 1.3088 and reaching a headline spike high of 1.3151.

Overnight, cable dropped from a high of 1.3185 in Asia and continued to bleed out throughout the European and London session.  The dollar has been firm in its own right while Brexit talks have not yielded any results. The European Union has so far refused to provide concession on the Irish Backstop although the latest headlines are feeding the markets with fresh optimism that a new offer could be on the cards from the EU with respect to the backstop.

  • EU said to await UK response on new Brexit offer.
  • It goes further than concessions outlined in a letter in January.
  • The EU proposal focuses on bolstering a review system that’s already set out in the deal.
  • However, there are doubts that the offer will fall short of what Britain has demanded and it could just add more fuel to the fire in favour of the downside for cable once again.  

GBP/USD levels

The spike has seen some mean reversion with the declining hourly Bollinger bands towards the 21-hr SMA with price still below the hourly cloud base and trend line resistance/100-hr SMA confluence. The lows fell short of S3 located at 1.3081 but did record the lowest level since 25th Feb. A break of S3 will open risk towards the 50% Fibo of the mid-Feb swing lows to late Feb swing highs located in the 1.3060s as the last defence for a break to the 61.8% of the same range down just below 1.30 the figure. Conversely, bulls need to get back above trend line resistance and the top of the hourly cloud/100-he SMA area between 1.3170/90 area.  

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