Sterling spikes higher after Bloomberg reported that both the German and U.K governments are willing to abandon important Brexit deal demands for the sake of an easier path towards a soft Brexit deal. This is an important positive development for the British Pound which has been pressured downwards by the growing tensions between the EU’s chief negotiator and the UK Prime Minister. In addition to the positive Brexit development, U.K’s Services PMI figured surprised the market and printed better than expected at 54.3 relative to the consensus 53.9. For today, the Pound will continue to be driven by any developments related to the Brexit negotiations, additionally, investors need to watch for the ADP Nonfarm Employment Change number from the U.S as it will affect the pair from the U.S Dollar’s side.
The Pound formed a double bottom reversal pattern after reaching a key support level and the 0.618 Fibonacci retracement. These two points served as a strong block against Pound bears. After the double bottom formation, the pair was able to break above the 13-period moving average and the 50-period moving average. A break above the 200-period moving average will signal a broader shift in the trend of the pair and expose the next key resistance level at 1.30356.
Support: 1.29608 1.30356
Resistance: 1.28920 1.28282