The GBP/USD pairing appears to have entered a bullish phase over the 1.2600 after some unlikely positive Brexit commentary from the unlikeliest of sources – the Irish Deputy Prime Minister.
Despite a brutal sell-off on December 10th – attributed in part to recent Brexit chaos – things seemed to be looking up by the 11th after Simon Coveney, the Irish deputy PM, stated that there was plenty of potential for a brand new statement regarding the EU declaration of the Irish backstop that could reassure parliament in the UK.
Sterling also received an additional boost after official figures showed that the average weekly earnings for Britons had jumped by over 3 percent in the three months leading up to October. These figures exclude bonuses and mark the highest real-term wage rise since November 2008. The number of people in work also rose by 79,000 – a record high.
Still Wary
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Despite these supporting factors and a renewed US Dollar selling bias, the up-move still lacked any real conviction – most likely remaining capped due to further Brexit uncertainties. It’s therefore unclear whether the improvement is backed by genuine purchasing or is merely led by short-covering in the near-term.
Traders now await the US economic docket, which highlights PPI figures for November. This could hold some influence on the USD and create opportunities for short-term investment among those playing the forex market.
The Tory leadership challenge came and went with little to no impact on Sterling – highlighting the theory that markets saw the result as having little impact on the wider Brexit impasse.
Technical Levels To Keep An Eye On
Any up-move will more than likely confront fresh supplies near the 1.2650-60 mark. Above this, the pair will potentially reclaim a round 1.2700 figure. Conversely, the 1.2580-75 area seems to protect any immediate downside. If things take a real dip, they’re likely to plummet quickly towards 1.2535 and beyond.