GBP/USD: Brexit jitters trouble Sterling bulls around multi-year high

GBP/USD: Brexit jitters trouble Sterling bulls around multi-year high

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  • GBP/USD eased from fresh high since May 2018 on Friday.
  • Calls between Barnier-Frost failed, Johnson-EU’s von der Leyen also talked and restarted Brexit negotiations.
  • The Guardian signaled breakthrough in fisheries, BBC, Times and The Sky defy the optimism.
  • Johnson-von der Leyen will have talks on Monday.

Having eased from the multi-year high during the late-Friday, to 1.34387, GBP/USD is likely witnessing a gap-down opening to start the week’s trading. The reason could be nothing but the receding hopes that the Brexit deal is less likely to happen anytime soon.

Following the UK and the European Union (EU) policymaker’s public acceptance on no breakthrough in the talks, UK PM Boris Johnson and the European Council EC President von der Layen talked during the weekend to restart the negotiations.

In the fresh round both the sides initially flashed upbeat signals, per The Guardian. The news said, “Sources in Brussels said the two sides had all but finalized terms on the level of access for EU boats to seas within the UK’s 200-mile exclusive economic zone, with a transition period for phasing in changes understood to be between five and seven years.”

However, political reporters from the BBC, Sky News and the Times Radio poured cold water on the face of optimists while quoting sources from the UK Government defying any hopes of the Brexit deal as the differences remain present.

Moving on, any updates over Brexit will be the key as the talks are on while UK PM Johnson and EU President Von der Leyen will speak on Monday. It’s worth mentioning that the chatters over the US stimulus and the vaccine are additional catalysts that can offer near-term direction to the Cable traders. It should, however, be noted that a surprise agreement can help the GBP/USD buyers to challenge the early 2018 top while any disappointment is less likely to be taken lightly.

Technical analysis

Overbought RSI, Brexit uncertainties can trigger fresh pullback near the multi-year top. 10-day SMA near 1.3370, followed by an ascending trend line from November 13 around 1.3315, offers immediate supports to the pair during its pullback. On the contrary, sustained trading beyond May 10, 2018 high near 1.3615 can eye for March 2018 bottom surrounding 1.3810.

Credit: FX Street

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