Sterling Extends Gains as No-Deal Fears Subside

GBP/USD Daily Chart

The British Pound built on its gains in early Wednesday trading amid hopes that a no-deal Brexit is becoming increasingly unlikely. The prospect of a delay to Britain leaving the European Union also helped to bolster sterling.

On Tuesday, U.K. Prime Minister Theresa May told lawmakers in parliament that if they rejected the Brexit deal she reached with Brussels, they could then vote on March 14th on an extension to the scheduled March 29th departure.

Another important shift took place on Monday when opposition leader Jeremy Corbyn said the Labour Party would back a second Brexit referendum in order to stop a Tory no-deal Brexit.

Fibonacci Retracement Levels on GBP/USD Daily Chart

Cable (GBP/USD) reached its highest levels since July of 2018 on Wednesday, managing to break above the 1.33 handle. Looking at the daily chart above we can see that price is nearing the major 50% retracement of the down move that began in April 2018. This level of 1.3401 represents major resistance to the upside.

EUR/GBP Weekly Chart

Meanwhile, the pound made even greater gains against the euro – reaching the highest levels since May 2017.

Despite the recent optimism there is little consensus among analysts over what will happen with Brexit. The no-deal outcome remains possible, even in the event of an extension to the May 29th deadline.