The GBP has been bearish since Early September, as the attention shifted from the coronavirus to Brexit. In September, the negotiations between the EU and the UK weren’t producing anything substantial, so the sentiment was negative for the GBP that month.

But yesterday we saw a 200 pip rally, as the negotiation deadline was postponed. Reuters reported on this earlier, citing the latest draft from the EU summit conclusions. This pretty much reaffirms the earlier report here, that there has been a slight change in language on the Brexit front by European leaders, now that they expect that the UK will also signal some intention to keep negotiations going beyond this week.

The GBP rallied higher, sending the GBP/USD 200 pips higher, but today it has reversed down again, and has given back 100 pips. Extending talks doesn’t mean that a real a trade deal will be reached any time soon, so don’t get too excited about this, since the GBP is shrugging it off already.