- Summary:
- GBPUSD is back above 1.30 on renewed Brexit deal optimism. An inversed head and shoulders pattern points to more strength.
The day started with a positive note for the GBPUSD pair. Michele Barnier, the Chief Negotiator on behalf of the European Union, just signaled that the two parties might be closer to an agreement than others think. Right after the news made the headlines, the GBPUSD pair jumped above 1.30, in another attempt to break the pivotal level.
It did so far, and it remains to be seen if it has the power to reach the measured move of the inversed head and shoulders pattern it formed. If yes, then bulls are in for a 1:2 risk-reward trade.
A Brexit Deal Just Got Closer
EU’s Barnier this morning made headlines with some optimistic remarks over the Brexit negotiation. He stated that it is possible to find a compromise on important areas discussed but also warned that no deal would be possible without a fair solution for fisheries.
All in all, the message implied optimism moving ahead, and the pound took it seriously. From the moment Barnier started to speak, the GBPUSD broke 1.30, the EURGBP fall below 0.9, and the GBPCHF popped back to 1.18.
GBPUSD Technical Analysis
The chart below reflects the full extent of the ongoing negotiations between the United Kingdom and the European Union. Every time the pound rallies, it does so on positive news – news of a deal. Last week’s summit failed to bring more optimism, and, as a result, the pound consolidated. In fact, it consolidated for over a month, having fast declines and aggressive bounces.
From a technical perspective, the pair looks poised to break the neckline of an inversed head and shoulders. It did not do so yet, and maybe it will build more energy before so. However, the fact that it keeps the higher lows series from the head of the pattern suggests a bullish bias. As such, bulls may want to buy a break above 1.31 with 1.30 stop loss and 1.34 take profit.
GBPUSD Price Forecast
