The pound sterling rallied to a five-week high on initial reports that the EU and the UK reached an agreement regarding Brexit. The news comes just a week before the UK is set to leave the EU and months of deliberation.
But later in the day, the deal was rejected by the UK’s key ally, the Democratic Unionist Party (DUP). The negotiations now remain fluid. This could potentially see some higher volatility in the GBP.
GBP/USD Likely to Post a Correction
The currency pair has been in a steady uptrend. But on Thursday, price action retreated after spiking to a daily high of 1.2989. This comes as price action hit a major resistance level.
The pullback also coincides with the hidden bearish divergence on the daily chart time frame. In the near term, GBPUSD could see pulling back below the resistance area. The lower support at 1.2582 remains due for another possible test of support.