GBP/USD is up by 0.2% on the day after touching a two-week high earlier
The dollar is making a bit of a comeback in the session as it erases earlier losses against the major currencies bloc. Of note, the euro, loonie and kiwi are all trading flat on the day against the greenback currently.
However, the pound is still holding onto its gains against the dollar after having seen cable touch 1.3185 earlier — a two-week high.
This owes to the fact that there’s been a picture being painted on optimism surrounding a Brexit deal. The headlines just keep on adding to that for the moment. It all started with overnight trading and in this session alone we already had three positive headlines of note:
- Brexit: Thirty Labour party rebels reportedly prepared to back Chequers deal
- EU is said to no longer expect a separate new proposal from UK on Irish border fix
- EU lawmaker Hubner says there is a smaller probability for no-deal Brexit now than for some time
With technical levels in cable continuing to side with buyers for the time being, the next key test for the pair will be the 26 July high @ 1.3213. But before that, there will be offers around 1.3200 to navigate through as well.
The Brexit deal optimism is something that cannot be understated and that will continue to keep the pound underpinned ahead of crucial discussions at the EU Summit next week. As long as price holds above the 100-day MA (red line) @ 1.3103, buyers can take encouragement from the headlines here to build on a move higher.