Last Minute Backstop Progress Supports Sterling

• The GBP/USD is trading little changed on the upside around 1.3070 as the last-minute progress in Irish border backstop was agreed at May-Juncker meeting.
• The FOMC minutes were less dovish than expected with the US central bankers confirming patience in further rate adjustment given the global economic slowdown and lack of inflation pressures.
• The UK Prime Minister Theresa May is facing a deadline of February 26 to exhibit the progress on the backstop with Remain Ministers claiming delay of Brexit.

The GBP/USD is trading little changed on the upside at around 1.3070 after rising as high as 1.3109 overnight with the European Commission President Juncker agreeing with the UK Prime Minister Theresa May to re-write the withdrawal agreement with changes in the Irish border backstop claimed by the House of Commons and UK hardline Brexiteers.

The high-level meeting of Juncker and May in Brussels saw the two sides agreeing to keep working on a solution to make the Irish backstop more acceptable to the UK. Both sides agreed to review the progress again in the coming days.

The EU reportedly claims that members of parliament vote on backstop change first before the European Council summit due in March 20-21 confirms the deal.

The time is tight with the UK Prime Minister giver the deadline of February 26 to come up with something in her hands before the Remain Ministers decide to rebel and vote in favor of so-called Cooper amendment in order to allow the UK parliament to take the option of a no-deal outcome off the table before deadline day on 29 March.

Technically the GBP/USD broke away from the downward sloping trend that saw the currency pair fall as low as 1.2770 last week. With the GBP/USD trading at around 1.3070, well above a 200-day moving average (DMA) of 1.3000 on the upside the 1.3100 is the next target. The support is at around 1.3030 and a 200-DMA at 1.3000.

The break out on the upside is also accompanied with the bullish crossover of Slow Stochastics in the Oversold territory and the reversal of the Relative Strength Index to the upside that is currently pointing lower.

GBP/USD daily chart