The GBPUSD is trading well above 1.2800 in the New York session as rumors of a major breakthrough in the latest Brexit deal negotiations hit the markets. The GBPUSD added to its gains after reports claim that the UK’s proposals on the Irish backstop have been accepted by the Democratic Unionist Party (DUP).
Consequently, the GBPUSD has added nearly 0.3% on the day and is currently trading at 1.28408 as at the time of writing. The pair is also benefitting from poor retail sales figures from the US, which came in much lower than expected.
So far, there have been no official confirmations from the UK or EU side, as the European Council President Donald Tusk failed to provide any concrete information when asked about the latest developments during an interview with news channel TVN24.
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Technical Outlook for GBPUSD
The GBPUSD is currently testing the resistance posed by the 61.8% Fibonacci level (1.2836) that is obtained from a trace of March 13’s swing high to the swing low of September 3. The pair’s rise in the last 4 days has been very steep, showing that there is huge bid on the GBPUSD.
A break above 1.2835 targets 1.2954 initially. This is where the daily price candles of Feb 22 and March 11 formed lows that constitute a previous support level, but will now act as a resistance in role reversal. If bullish pressure persists beyond this level, then the 78.6% Fibonacci retracement line (April 29 and May 14 highs) at 1.3080 becomes the next target.
If GBPUSD fails to break the 61.8% Fibonacci retracement level, then price may reach back down to test yesterday’s resistance at 1.2662 (previous low of June 15).
More headlines are expected; therefore the situation will continue to remain fluid.