Sterling jumps on hopes of a Brexit deal

The sterling rose sharply today as traders cheered the prospects of a deal between the United Kingdom and the European Union. The currency rose to the highest level in two years against the euro and broke an important resistance level. The gains soared after Theresa May’s speech in which she said she was open to delaying the UK’s departure from the EU. It also came after Jeremy Corbyn said he was open to having the second referendum. In her speech, Theresa May said that if the MPs will reject her final offer, she will offer a vote on whether to press on with a no-deal Brexit or take a short extension of the Article 50 process.

After yesterday’s sharp decline, the price of crude oil rose today as traders doubted the impact of Trump’s tweet yesterday. Yesterday, the US president sent a tweet asking OPEC to stop the supply cuts, which has led to a surge on the price of oil. This year, West Texas Intermediate (WTI) and Brent have risen by more than 10%, fueled by the supply cuts from OPEC. Earlier on, a report by Wall Street Journal quoted an OPEC leader who said that it will be impossible for OPEC to follow the US demands for more supplies.

The USD was mixed in today’s trading sessions as traders waited for Federal Reserve’s Jerome Powell testimony to congress. Traders will want to know whether the chair has changed his views on the economy. The economic data released today were mixed with the building permits increasing faster than expected. In December, the building permits rose to 1.326 million, which was higher than the expected 1.250 million. This was a 0.3% increase from the previous month. However, the housing starts numbers disappointed. In December, housing starts increased by 1.078 million, which was lower than the expected 1.25 million. On a MoM basis, the starts decreased by -11.2%, which was worse than the expected -0.5%.

EUR/USD

The EUR/USD pair was little moved in today’s sessions as traders waited for the Fed Chair’s testimony. The pair is trading at 1.1365, which is close to yesterday’s close but higher than the highest level since 15 February. The price is above the 21-day and 42-day EMAs, while the RSI has continued to move up. It is now nearing the overbought level of 70. There is a possibility that the pair could reverse the gains made.

GBP/USD

The GBP/USD pair rose to the highest level since October last year after hopes that a no-deal Brexit will be averted. The pair is currently trading at 1.3172, which is higher than the 21-day and 42-day moving average. The momentum indicator has moved above the 100 level as has The Bulls Power indicator. There is a possibility that the price will continue to go up. However, since today’s high was an important resistance level, the pair could move slightly lower.

XTI/USD

After declining yesterday, the XTI/USD pair rose slightly today to 55.86. The pair rose after traders started to question the efficacy of Trump’s campaign to lower the price of oil. The pair’s price is slightly lower than the 42-day and 21-day moving averages. Since there is no trend, the ADX has collapsed to about 20. The pair could remain at these levels as traders wait for the next inventories data.