GBP : Brexit Deal Rally
(Tue, 22 Dec 2020). UK Prime Minister Boris Johnson is said to have conceded demands on fisheries in order to help get a Brexit deal across the finish line. GBP/JPY and GBP/USD have reversed their daily losses – which exceeded -1% at times – and are now positive on the day. Retail trader positioning suggests a bearish bias to GBP rates.
AVOIDING A ‘NO DEAL, HARD BREXIT’
The British Pound is rallying as UK Prime Minister Boris Johnson is said to have conceded demands on fisheries in order to help get a Brexit deal across the finish line. The previous demand that the UK retain some 60% of international fishing waters has been dropped to 33%, contingent upon the EU making concessions elsewhere; the EU’s position regarding fisheries has been steadfast at 25%.
Avoiding a ‘no deal, hard Brexit’ is a top priority for the UK, particularly as a new mutation of COVID-19 has sparked swift lockdowns in London and by foreign neighbors. At the time of writing, GBP/JPY and GBP/USD have reversed their daily losses – which exceeded -1% at times – and are now positive on the day.
GBP/JPY RATE TECHNICAL ANALYSIS: DAILY CHART
A lot of volatility has yielded little by way of direction in GBP/JPY through December. To this end, the forecast from early-December holds: “GBP/JPY rates have traded sideways through the second half of November, but the consolidation appears to be occurring within the context of a symmetrical triangle dating back to the March coronavirus pandemic low. Resistance has been found around 140.01, the 76.4% Fibonacci retracement of the 2020 high/low range. A bullish piercing candle on the daily chart on Monday, November 30 suggests that topside pressure remains. Similar to GBP/USD rates, traders should be on alert for bullish breakout potential in GBP/JPY rates. “
GBP/USD RATE TECHNICAL ANALYSIS: DAILY CHART
GBP/USD rates have jumped from the rising trendline from the March and November lows, experiencing a high degree of volatility in recent weeks with the fate of a Brexit deal on the line. Although fresh yearly highs were achieved last week, resistance remained in the form descending trendline from the November 2007 and July 2014 highs – that is, until today, with the large bullish hammer candle forming on the daily chart. It’s been previously noted that “breaching 1.3539 and sustaining a breakout move higher would indicate a long-term bottom has formed in GBP/USD rates.” With a Brexit deal in sight, a bullish breakout may soon gather pace in GBP/USD rates.
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