The sterling jumped sharply yesterday after progress appeared to be made between the UK and the EU countries. Yesterday, Germany and the UK abandoned key demands, which increased the chances of a deal. Germany said that it was ready to accept a less detailed agreement on UK’s future with the EU. The UK on its part said that it was ready to settle for a vague statement of intent on the future relationship with the EU. This means that it will postpone some key decisions until after Brexit day.
This is good progress coming from two differing sides. Just last week, the chief EU negotiator said that he was deeply opposed to some of the proposals of Theresa May and her cabinet. This lead to a rebuttal by May, who wrote an opinion piece saying that she was ready for a no Brexit deal with the EU. She argued that she was not ready to give in to so much. The new truce between the two sides mean that the broad opposition to her Chequers plan will not be a barrier to getting a deal. This is because there are two main parts to Brexit. The first is the separation agreement and then there is the future trade deal. The former is intended to ensure that the Brexit process is orderly while the latter is intended to ensure that that the EU and UK have a good trade relationship.
After the deal was announced, the pound jumped by more than a percentage point. The pair reached 1.2907. This is slightly lower than the yesterday’s high of 1.3045. On the 8-hour chart, this level is above the 25-day SMA and lower than the 50-day SMA. As it jumped yesterday, the bulls power rose as well as more bulls moved in to buy. This buying power has eased a bit as the bulls took profit. Today, the GBP/USD pair will be watched as the Brexit negotiations continue.