GBP/USD Reverses Intraday Losses After EU Official Says Brexit Deal is Imminent

Summary:

The GBP/USD has regained bullish momentum following comments by an EU official on an imminent trade deal with the UK this weekend.

The GBP/USD pair seems to have regained bullish traction after an EU official hinted at a possible deal by the weekend. Excluding any last-minute disagreements, the official indicated that an EU-UK trade deal was imminent. Reuters reports that EU top negotiator Michel Barnier’s update to EU national envoys has been shelved. An unnamed EU Commission spokesman said this became necessary due to intense negotiations.

Responding to the latest developments, the European Council President Charles Michel maintains that all EU states would accept all EU-UK post-Brexit trade deals.

These developments enabled the British pound to reverse initial losses on the day and pushed the GBP/USD pair 0.19% upwards, as of the time of writing.

Technical Outlook for GBP/USD

The GBPUSD’s upside move has met resistance at the initial upside target identified in yesterday’s piece at 1.34765. A break above this level is needed to take the pair towards 1.35134 (13 December 2019 high), which secures the highest price of 2020. Above this level, the 1.36117 resistance formed by the 3 January/9 May 2018 highs would come into view. A Brexit trade agreement could make this outlook more secure.

On the other hand, any last-minute breakdown in talks could cause some short covering, which sends the pair towards the initial downside target of 1.33193. 1.32663 comes into focus with an extended decline, as does 1.31754, where the lows of 4 September and 16 November are found.