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GBP/USD surges above the 1.3516 December 2019 high amid Brexit optimism

  • GBP/USD recently jumped from around 1.3460 to above the December 2019 1.3516 high despite a lack of any fresh fundamental developments.
  • The pair has been choppy this week as Brexit negotiations seemingly approach their climax.
  • GBP/USD strength is also being exacerbated by USD weakness in wake of a soft November jobs report. 

Despite a lack of any fresh UK or Brexit specific newsflow, GBP/USD recently jumped to fresh highs since H1 2018, surpassing the 1.3516 high set back in wake of the UK general election in December 2019. At present, the pair trades close to 1.3530, with gains of around 80 pips of 0.6% on the day.

GBP tops the G10 performance table on Brexit optimism

At present, GBP is the best performing currency in the G10. Though recent gains cannot be directly attributed to any specific headline, Brexit optimism seems to be the name of the game on Friday. In terms of the latest, GBP caught a bid on Friday morning on headlines quoting EU sources as saying that a Brexit trade deal is “imminent” and expected by the end of the weekend barring last-minute breakdown in discussions.

USD weakness in wake of a soft US labour market report seems also to be helping pound sterling; as a recap, the US economy added just 245K jobs in November according to the Bureau of Labour Statistics (BLS), and though the unemployment rate dropped, this was due to a decline in the participation rate. BLS said that 3.9M Americans were prevented from looking for work in November due to the pandemic, up from 3.6M in October.

Technical buying on the break out also seems to be at play, or perhaps a run on stop-losses placed just above the 1.3500 level or December 2019 high at 1.3516.

GBP/USD eyes move higher towards 1.3600 and beyond

To the upside, little by way of key levels of resistance stand between GBP and the psychological 1.3600 level. Beyond that, the next significant area of resistance is the 1.3360 September 2017 high, and above that, the March 2018 low just above 1.3700. To the downside, the December 2019 high at 1.3516, the 1.3500 level and the 1.3485 September 2020 high should all offer strong support.

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