The British pound extended its gains and jumped higher towards the next hurdle around 1.35-1.3515. Traders who traded the bullish movement yesterday had, however, to struggle with limited upside swings and short-term corrections before the pound was ready for another leg higher. Reportedly, Dublin and London are close to an agreement on the Irish border which will allow Brexit talks to move forward. The Irish border is a main obstacle in separation talks. The latest progress in the divorce talks has thus pushed the pound to fresh highs.
Given the strong rally we anticipate further gains in the GBP/USD. Next higher targets could be at 1.3515 followed by 1.3570. On the bottom side, it would require a renewed break below 1.3250 to reinvigorate bearish momentum.
The EUR/USD found some support near 1.1820 from where a reversal started. As noted in yesterday’s analysis, as long as the euro remains well above 1.18, we favor a bullish bias anticipating higher targets at 1.19 and 1.20. If the euro falls however below 1.1830 and further 1.18, we could see bears taking over.
Euro traders should keep an eye on the Eurozone Consumer Price Index, scheduled for release at 10:00, which could lead to some upside swings in the EUR/USD. From the U.S. we have the PCE deflator scheduled for release at 13:30 UTC which is the Fed’s favored inflation measure.
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