Search ForexCrunch
  • Cable steps up on EU-UK banking deal hopes.
  • Brexit remains a key issue with multiple sticking points, but Pound bidders are enjoying a temporary reprieve from constant selling.

The GBP/USD is scorching back up to the week’s highs on bullish optimism following announcements that the UK has reached a tentative deal that will allow European traders to maintain access to critical UK clearing markets in the event of a messy no-deal Brexit.

According to initial reporting by the Financial Times, the European Commission’s Vice President Valdis Dombrovskis has pledged that European equity traders will be able to keep access to crucial UK derivatives clearing services, even if the UK makes a messy exit from the EU. The stopgap is only a temporary fix in an effort to mitigate the potential for out-of-control transaction cost increases following a hard-Brexit scenario, but Sterling markets are lurching forward on the headlines as currency markets are starving for any kind of positive developments in Brexit negotiations.

The Cable’s current action could easily see further challenges later on Thursday, with the Bank of England’s (BoE) latest Interest Rate Decision and Monetary Policy Statement, and Pound buyers could find themselves on the wrong end of intraday momentum if the UK’s central bank lands with too-dovish rhetoric.

GBP/USD levels to watch

The Cable surged into the 1.2850 level immediately following the EU-UK banking deal breaking headlines, lifting the GBP/USD back into the week’s current highs, and last week’s bottom at 1.2775 will hopefully provide support for overstretched intraday buyers, while October 24th’s swing low into 1.2865 will be keeping near-term moves capped unless bidders can keep the wheels turning ahead of the BoE’s showing later today.