The British pound continued its upward movement today, adding another 250 points against the US dollar, after another important meeting, at which Michel Barnier, the EU’s chief negotiator for Brexit, secured the EU’s agreement to start intensive negotiations on the latest proposal made by the British Prime Minister Boris Johnson. Most likely, we are not talking about last week’s proposal, which was rejected by EU representatives this Tuesday, but about the new plan, which was announced yesterday by the British Prime Minister Leo Varadkar, the Prime Minister of Ireland. Such news served as a good incentive for buying the British pound, the growth of which stopped at 1.2700, while yesterday the GBPUSD pair was trading at 1.2200.
According to sources with knowledge of the meeting, ambassadors representing EU member states have given the green light to accelerated talks in the hope of agreeing on terms for the summit, which begins next Thursday. However, as noted above, the details of Johnson’s latest EU proposal are still unknown.
European Council President Donald Tusk said today that the EU is still in a situation where the UK has not made a workable, realistic proposal, but promising signals from the Irish Prime Minister that an agreement is still possible are very good news. Tusk believes that it is necessary to use even the slightest chance of an agreement, but the success of the negotiations is not guaranteed since the time has almost expired.
In turn, the current British Prime Minister Boris Johnson today promised the EU to offer a solution that will suit everyone. According to him, the proposed solution will satisfy not only “hardcore brexiters”, but will also combine the solution of problems, which will allow avoiding a tight border on the island of Ireland, ensuring the integrity of a single market.
Of course, it all sounds pretty nice, and it is clear that the market believes in reaching an agreement and compromise, which was made by the representatives of the EU. But what will happen when the proposed Brexit scenario is abandoned again early next week, or closer to the EU summit, remains to be seen. So for a long time, you should not forget about the levels of 1.2200 and 1.2000.
As for the technical picture of the GBPUSD pair, it is useless to talk about the levels now. While high volatility persists, it is best to look for long positions in the trading instrument after a downward correction from the support of 1.2570 and 1.2530.