Will they? Won’t they? Who knows but we all knew there would be drama attached whatever the outcome. Talks are entering the pivotal stages, at the October summit which was once deemed critical in agreeing to a deal, it now appears that the November/December extraordinary will go ahead after all. This hasn’t been agreed but going off cable (GBPUSD) it does give you the feeling that traders are preparing themselves for good news.

Recent reports suggest that talks are becoming a little more positive on the Irish border problem. There has been a deadlock on what would happen with the border if a trade deal cannot be agreed during the transition period, with EU adamant that Northern Ireland remains in the customs union until such a deal is finalised. The UK are unhappy with this backstop proposal as it effectively splits up the union, brexiteers would like a solution which could unilaterally pull out the UK from this arrangement. The EU will not accept this solution as well as any imposed time period on the backstop but the latest reports suggest the UK has presented a “review mechanism” that allows the backstop to be terminated with mutual agreement by all parties. Now the question is, with any proposed deal needing parliament approval, will this “review mechanism” be seen as an opportunity for the EU to veto attempts to leave the backstop?

Cable has seen a strong bounce back in the last 7 days, seeing as much as a 3.2% gained. We are approaching the broken trend support which saw strong downside pressure when it gave way, above here we start to look at a trend resistance zone which has held moves since June 18. This zone is capped by the 38.2% fib at 1.3317, above here could be a sign of positivity leaving the potential for further moves north. The pound is fundamentally driven so moves higher will be on the back on strong sentiment that a Brexit deal is possible that will receive the support of parliament.

GBPUSD Daily Chart – Prices Rebound Sharply On “review mechanism” Talk

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