10:28, 01 May

Surges Back Above 1.30 as Brexit talks take positive turn

In the last few days the GBPUSD has been able to rally and then surge higher to get back above the 1.30 level after it has spent the last six weeks or so falling lower from a nine month high near 1.34. In the last couple of weeks it has fallen steadily lower with very little signs of support so the last few days are slightly encouraging. In early March the GBPUSD fell sharply from an eight month high back down below the key level of 1.32 before rallying again and reaching a nine month high shortly afterwards. 
Late February was significant as the sterling moved so strongly breaking through the key level for the first time in many months on its way to the eight month high. The other key level presently is 1.27 which may be called upon should the GBPUSD continue to fall lower from its present trading levels.

The sterling enjoyed a very positive January as it has moved from below 1.27 up to a three-month high at the resistance level around 1.32, before a subsequent decline. Starting in mid-December, the GBPUSD had slowly but steadily climbed higher from a two year low below 1.25 up to the current key level of 1.27 and beyond. As expected, it met some resistance from the 1.27 level at the end of last year as multiple attempts to push higher were thwarted and now that it has cleared, you could expect the pound to receive some support from this level should it be called upon.

In early December, the 1.27 level gave way to immense selling pressure, after the sterling was again enjoying much needed support from this level as it had firmly established as a key support level as the currency pair had enjoyed considerable support from this level on several occasions in the few months prior. Should the GBPUSD drop through the support at this level, then it could fall considerably further with no obvious support levels nearby.

The British government has effectively given up on trying to force through the Brexit deal using the withdrawal agreement bill and has been trying to concoct a way to forge a compromise through new indicative votes if talks with Labour break down.  Labour’s Sue Hayman has said that cross-party talks on Brexit between the government and Labour have moved on to the “nuts and bolts” of a possible compromise.  Hayman said it was “a really constructive discussion” that had been “getting much more into the nuts and bolts of the detail.”  She said she now believed the government was “open to moving forward in our direction”.  Sources from both sides of government have suggested that discussions were taking a more positive tone.  The cross-party talks are likely to continue this week, including specific important areas that have previously been contentious including single market alignment and dynamic alignment of workers’ rights and environmental protections.