The Pound spikes higher as news of a possible Brexit deal circulated the market. During a radio appearance, UK’s Cabinet Office spokesman David Lidington suggested that a Brexit deal is “almost within touching distance” and a possible deal draft between the UK and the EU may come out by the end of this week. Yesterday, Pound traders failed to make any reaction to the better than expected UK wage growth and worse than expected unemployment rate signaling that the Brexit negotiations is the key driver for the pair. For today, the UK’s inflation figures are set to be released but traders are not expected to make any move depending on the results of the figures. The focus will remain on the Brexit negotiations, and traders will try to watch if any major political figure will comment on this matter.
The Pound rises all the way towards the 1.3047 resistance level which also coincides with the 200 and 50-period moving averages. The existence of this level with the two major moving averages makes it a crucial level in determining the general bias of the currency. A break above this level will mark a shift in the bias of the pair from a bearish one into a bullish one. Moreover, the break above this level will pave the way for a rise towards the next key resistance level at 1.3170. On the flip side, if sentiment remains bearish and negative Brexit news is released then the pair will break below the 13-period moving average and drop back towards the 1.2806 support.
Support: 1.2937 / 1.2806
Resistance: 1.3047 / 1.3155