Brexit

GBP/USD: Key Levels to Watch as Boris Johnson Heads to Brussels

The GBP/USD pair is tilting higher as traders focus on Boris Johnson’s last-ditch effort to avert a no-deal Brexit. The focus will be on a dinner meeting between Johnson and EU president, Ursula von der Leyen in Brussels. It is trading at 1.3383, which is substantially higher than this week’s low of 1.3225.

In a statement yesterday, Johnson said that he would remove the contentious parts of the Internal Market Bill in a sign of goodwill ahead of today’s meeting. By meeting with EU’s leaders, he hopes to avert a major crisis that analysts expect will cost the country more than 300,000 jobs.

Still, there are significant challenges between the UK and the EU. The two sides are differing on fisheries, fair trade, and governance issues. And experts believe that it will be difficult for the two sides to iron-out the differences in a single meeting. Indeed, Michel Barnier, the Chief EU negotiator has already warned the EU to start preparing for a no-deal situation.

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A positive outcome of the meeting will be a good thing for the GBP/USD price. This could see it resume the overall bullish trend. On the other hand, signs of disagreements will push the pair below this week’s low of 1.3225.

GBP/USD technical outlook

On the daily chart below, we see that the GBP/USD formed an evening star pattern with a high point of 1.3541 on November 4. It then dropped for two consecutive days and is now attempting to rebound. The upward trend is supported by the ascending trendline that is shown in black. It is also above the 25-day WMA, which is a sign that bulls are still in control.

Therefore, as mentioned above, the price action will depend on the outcome of today’s meeting. In case of a deal, it is possible that the pair will continue rallying and reach a high of 1.3540. In case of more disagreements, it will retest the low of 1.3225.

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GBP/USD technical chart

GBP/USD

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