The British Pound remained on the front foot in early trading on Friday, amid rising optimism over a Brexit deal and easing lockdown rules in the UK. Sterling remains near a 5-month high and is currently holding above the key psychological level of 1.30.
UK chief negotiator Sir David Frost said on Thursday that a Brexit agreement can be reached with the European Union in September. Sir Frost stated: “As we keep saying, we are not looking for a special or unique agreement. We want a deal with, at its core, an FTA like those the EU has agreed with other friendly countries, like Canada.” He added: “The UK’s sovereignty, over our laws, our courts, or our fishing waters, is of course not up for discussion and we will not accept anything which compromises it – just as we aren’t looking for anything which threatens the integrity of the EU’s single market.”
Meanwhile, lockdown measures are set to ease further in England from Saturday August 15th. Prime Minister Boris Johnson announced that theaters, casinos and bowling alleys will be allowed to reopen. Wedding receptions of up to 30 people will also be permitted.
Investors shrugged off Wednesday’s ugly GDP release, which showed that Britain’s economy shrank by 20.4% in the second quarter. The figure marked the biggest quarterly decline since comparable records began in 1955 and was the worst of any G7 nation in the three months to June.
Looking at the GBP/USD daily chart, we can see that a pennant pattern has formed and that the market has been in a steady uptrend since late March. Sterling bulls eye the 1.3212 level for a potential breakout to the upside.