The GBP has had a stellar day today, as Barnier the EU negotiator for Brexit went out on a limb and said they were prepared to work out a deal for the UK that would be unlike any other produced before. There is still a degree of scepticism from some internal factions in the UK regarding this, but for once it looks like the possibility of a no-deal scenario may be off the table. One thing that is important to note is that the EU and UK have dropped their stance regarding the October deadline as well, which means they can move these timelines further down the road. It's likely that this will give both parties time to work out what is an extremely complicated process, but it may also open up further political opportunities at home in the United Kingdom. For now though, this ray of hope has spurred on the markets and expectations are high we could see something worked out, which would certainly put businesses at ease.
Looking at the GBPUSD it's clear to see that the movements thus far have been very strong, as the bulls have surged back into the market. Resistance at 1.2985 was no match for the optimistic bulls as they lurched forward. So far the GBPUSD is teetering around the 1.30 mark with the 50 day moving average and resistance at 1.3069 just above to test the bullish resolve. If the EU were to pour cold water on this, for whatever reason, then certainly we could see large falls for the GBPUSD, and retests of support levels at 1.2798 and 1.2652. The main thing though is that for now the bulls are back in the driver's seat it would seem, as the GBPUSD has been politically driven for some time and now it looks like it may finally be there turn.
The other key story today was of course oil markets which once again capitalised on news that the drawdown from US inventories was worse than expected. With crude showing -2.57M barrels (-1.49M exp) and Gasoline also coming in at -1.55M barrels. This showcases that despite the recent wobbles in America the economy is still turning over strongly and demand seems to be on the rise despite some recent figures showing otherwise. Markets will be looking at these figures ahead of the winter months where more pressure is expected to show, and it could be the case we see a push up and above 70 dollars a barrel.
From a technical perspective 69.38 is the hard resistance level stopping any further movements higher. However, above this 71.47 and 73.29 are likely to be other levels that traders will look to target. On the flip side support can be found at 67.45 and 66.03, but I would primarily be focused on the bullish trend line which has propped up the oil market in recent times on bearish moves.
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