Sources reporting that a draft Brexit deal is close
GBP is off to the races again as a number of sources are reporting that the UK and EU are close to drafting a new deal. Subject to approval from the DUP, the confidence and supply partner of the Conservative government, reports suggest the deal could be the final breakthrough that all have been waiting for. Since last week, optimism has been riding high and the latest news is now pushing the Pound to some key levels - as we noted this morning.
Cable resistance is currently being tested in the 1.2750-1.2800 area, and a clear break above 1.2810-15 could see a swift move up towards 1.3000. In line with this, EUR/GBP is been hit hard and now looks set to push for a move below 0.8600 with 0.8500 the major level to look out for here.
Given this latest news, it is hard to see the market reining in the optimism given that the level of uncertainty has been heightened in recent weeks, with the Brexit deadline fast coming into focus.
There is still some way to go, as any deal will need to be agreed and voted on in the House of Commons, and MPs will be under pressure to vote in favour of this given the default position if not. We suspect there are some more twists and turns in this saga, but for now, GBP buyers are firmly in control and it is hard to see any material pull-back under the circumstances.