GBP pairs are pushing higher on Wednesday ahead of an important Brexit summit in the evening. The two parties are yet to reach a compromise on the issues that continue to drag down negotiations.

GBP is very much subject to the Brexit risks. The currency moves with Brexit headlines, positive and negative alike. As the time catches up ahead of December 31, the risk attached to this negotiation will surge.

The week started with a bearish gap. GBP fell sharply on Monday as a result of reported dovish comments from some UK/EU officials and top journalists who opened the possibility of a no-deal against the market general sentiment. On Tuesday, the Irish PM joined the doves with comments that a no-deal shouldn’t surprise anyone. GBP fell again. Later in the day, it recovered over half of the decline as UK’s Gove announced agreement in principle on all issues in UK-EU talks.

Boris meets Von Der Leyen

On Wednesday, GBPUSD recovered all of this week losses so far and turned bullish as UK PM Boris and EU’s Von Der Leyen meet later in the evening to find a compromise. December 31 deadline is 22 days away. After resuming negotiations since September, most of the issues have been solved except fishing, level playing ground and governance. The last two seem to be the most difficult as some UK sources vowed that the UK will not compromise on reclaiming its sovereignty. Let’s see if the top guns will find a common ground tonight. If tonight’s meeting is not successful, we should expect another massive fall across the GBP FX board. The fall would be much stronger depending on the severity of the outcome. Another week without progress will pressure the Sterling and lead to another bearish week.

Meanwhile, it’s not certain the big guns will resolve the issues tonight especially the EU. The power bloc is made of over 20 countries with each having a veto power. UK PM has also mentioned in the past that a no-deal is not a big deal for him. Aside these, the two leaders won’t necessarily soften their stands to get a deal done at any costs since they still have three weeks to drag it. Perhaps, some part of the outstanding issues will be resolved at best. We will most likely have another unsuccessful week and the Sterling will be pressured as a result. Going by their antecedents, negotiations since 2018/19 have not been easy between these two parties. This is like the grand-finale. Everyone wants to get the best deal possible.

Will GBPUSD end the week bearish? – a technical outlook

Brexit Forecast

The Cable completed a bearish ending diagonal/ wedge reversal pattern last week with a pin bar/inverted hammer daily candles pattern. A bearish move followed shortly after the currency pair broke above the 1.3485. The current rally is corrective but sharp and could go as high as 1.347. Unsuccessful talks tonight will drag the pair to 1.32 and even 1.31. Similar pattern can be seen on other GBP pairs. Selling bounces on GBP pairs this week looks ideal if this impasse enters into the next week.

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