The Pound has soared this Monday, with the GBP/USD gaining more than 1.4% after the EU and the UK agreed to extend Brexit trade deal discussions beyond the initial Sunday December 13 deadline.
Traders are hailing the development as a show of commitment by both parties to a possible trade deal before the December 31 transition deadline.
The decision to extend the talks was made after UK PM Boris Johnson and the EU Commission President Ursula von der Leyden gave their assent.
The talks remain deadlocked on fishing rights, with access to UK fishing waters to boats from the EU and state aid rules constituting the areas where consensus is yet to be reached. For GBP/USD traders, the finality of a trade deal remains the foundation for a sustained recovery of the pair.
The GBPUSD currently trades at 1.34005 at the time of writing.
Technical Levels to Watch
The 1.34765 resistance line (December 10 high) remains the immediate target for bulls. Above this level, the December 13 2019 high at 1.35134 that was violated on December 4 remains the next target, followed by the 1.36117 peak of May 9 2018.
On the flip side, rejection at the next upside target could set up a resumption of selling pressure, with 1.33193 and 1.32663 forming the initial downside targets. 1.31019 and 1.30554 also line up as viable targets to the south, which are attainable if the ascending channel breaks down. The BoE meeting is one of the macroeconomic data points which could impact the pair this week.
GBP/USD Daily Chart