The pound sterling posted gains on Thursday. This came as the German chancellor, Angela Merkel said that the EU and the UK could reach a deal on the Irish backstop agreement before the Oct 30th deadline. The remarks were however contradictory to the earlier statement where the EU said that the UK should find a solution within 30-days. The currency advanced on hopes that the UK could still manage a soft-Brexit.
Can the GBP/USD Sustain the Gains?
The gains in the cable come as expected, following the descending wedge pattern that was formed. The current gains could push the GBPUSD towards at least 1.2511 level. However, given that there is a strong hidden bearish divergence showing on the charts, there is a possibility for the currency to correct lower. Resistance level formed at 1.2170 will be likely tested as support ahead of further gains.
