- GBP / USD has seen a rally in recent trading amid a wave of optimism over Brexit, but failed to break the 1.3450 mark.
- If the rumors are true that a deal is close, a test of yearly highs at 1.3539 is likely to occur.
The pair GBP/USD It has been rising amid positive Brexit headlines in recent trade, with the pair breaking above the 1.3400 level and setting daily highs just below the 1.3450 mark. On the day, the British pound is the best performing currency in the G10 and is currently trading near 1.3430 with gains of 0.8% or just over 100 pips.
Latest Brexit: ‘Big Rumor’ the UK is heading towards a deal
At 16:06 GMT, a BBC report tweeted that there has been a “big stir” among Conservative MPs in the last hour that the UK is heading towards a Brexit deal. Furthermore, “Eurosceptics” are apparently assured that they will be happy with the deal, as the UK has apparently “ruled out” the prospect of unilateral punishment by the EU if the UK deviates from EU standards. EU in the future (called lightened tariffs). and negotiated a joint dispute mechanism.
The reporter goes on to warn that nothing has been confirmed yet, but news is likely to come that a deal has been reached / when UK House of Commons leader Jacob Reese-Mogg announces that the Commons will they will set on Monday and Tuesday of next week, before any official UK / EU announcement.
Also, Eurosceptic Conservative MPs have apparently said they would want to see any deal by Thursday and no later than Friday if they are to consider it in the Commons on Monday and Tuesday.
The latest reports come in the wake of some more positive noise from the EU. Earlier in the day, a German envoy to the EU was reported to have said a deal is still possible by the end of the week and Irish Foreign Minister Simon Coveney said he believes the two sides are seeing advances. Therefore, GBP bulls appear to be betting or even anticipating the prospect that the two parties could be about to announce a deal.
However, a Times reporter tried to curb some of the growing optimism, quoting his sources on both sides of the negotiations as saying that no deal will be announced tonight and that a deal is still possible this week.
As one market commentator pointed out, this wouldn’t be the first time that excitement that a deal could be close to being announced caused the British pound to rage, only for the British pound to tumble. Instead of looking at London, it would be better to look at Brussels for “white smoke”.
Regardless, if the rumors prove true and a deal is announced alongside the news that the House of Commons will meet next Monday and Tuesday (to make the deal into law), then the British pound is likely to see a higher leg, perhaps above and beyond current yearly highs at 1.3539.
GBP / USD aims to retreat towards yearly highs
As noted, if the rumors prove correct, it seems likely that it will move past last week’s highs at 1.3478 and then toward yearly highs at 1.3539. Beyond these levels, which would likely disappear in the event a deal is announced, a move towards 1.3600 and even September 2017 highs at 1.3657 would be on the cards. On the contrary, if the rumors turn out to be false, all this optimism will need to be discounted, and the GBP / USD pair is likely to slide towards this week’s lows around 1.3300, although if the talks continue in the background, see more beyond here to be unlikely.
Four hour chart
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