On Monday, the pound gained back from two-week losing streak against the dollar as hopes for Brexit deal was given a boost after PM Johnsons top aide was ousted ahead of “make or break” Brexit talks.
Hopes on a Brexit deal was boosted after the prime minister’s top advisor Dominic Cummings, confirmed he will leave his position, prompting some to suggest the UK is preparing to cave in on demands.
“Seeing him leave Number 10 carrying a cardboard box tells me a Brexit sell-out is close,” Nigel Farage, the former Brexit leader, said in a tweet.
The move comes ahead on last weekend’s deadline on Brexit talks, though many widely believe this week represents the likely deadline.
On November 19, the EU Leader’s summit is more likely to be used to broker a compromise on sticking points including level playing field commitments, and access to UK fishing waters that have held up progress, National Australia Bank said in a note.
“Brexit talks move to make or break stage, with compromise necessary to reach a deal as both sides struggle to get past the three remaining issues,” it added. “We continue to expect a deal.”
The UK and EU has until the end of the year to make a deal, however if a deal is not struck, the UK will have to fall back on terms set by the World Trade Organization.
The outlook of the sterling may improve this week due to a busy week of data with inflation and retail sales on the calendar this week.
In the daily charts of GBP/USD, the sterling edged higher against the dollar early Monday morning in Sydney session.
As what we can see in the charts, the price broke down from the support level at 1.31966 last Friday but quickly surged to resists at 1.31966 and closed with a strong bullish candle.
On Monday Morning, the price surged up higher as the U.S. dollar is facing uncertainties due to rising of COVID-19 cases and uncertainties on the vaccines. The pair found support again at 1.31966.
If the price will continue to support at this level, we can expect the pair to surge higher and test the resistance level at 1.34872. However, if the price will continue to surge down from this support level, we can expect the price to fall and retest the support level at 1.28685.
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