The Brexit-positive headlines strengthen the pound whereas crucial departure talks in Brussels challenge it. European negotiators have indicated for the first time that they are prepared to start writing a joint legal text of a trade agreement with the UK before fresh talks begin today.”

The bloc not only shows readiness to alter the legal statement, while taking clues from Britain but also drops the previous tone of warnings. The news also ignores the UK Cabinet Minister Michel Gove’s rejection to remove the clauses in the Internal Market Bill (IMB) that confront the Brexit Withdrawal Agreement (WAB).

It should be noted that the BOE’s Deputy Governor Sir Dave Ramsden mentioned that “At present, negative policy rates would be less effective as a tool to stimulate the economy.” Should the BOE Governor, Andrew Bailey, drop his recently bearish bias at the Chief Executives’ Club at Queen’s, GBP/USD bulls will have an additional reason to cheer.

On the other hand, US Democrats’ readiness to alter the demands over the coronavirus (COVID-19) aid package also favor the market’s risk-tone sentiment and helps the US dollar index (USDX) to recover Monday’s losses.

Looking forward, the Brexit teams of the UK and the EU, led by David Frost and Michael Barmier respectively, will meet in Brussels today. The departure negotiations were last stuck over the IMB and hence the same will become an important issue. However, talks concerning fisheries, level playing field also can trigger the British anger the call back the guys, which in turn will harm the GBP/USD prices.

It has also to be mentioned that the US President Election debate is likely to use American President Donald Trump’s tax payments as a fresh issue and may challenge the US dollar run-up.

The relatively low (new) COVID-linked deaths mean investors are not showing too much concern towards rising virus cases. Instead, they remain optimistic over the potential approval of a vaccine soon, which together with ongoing central bank support will probably help accelerate the recovery, says one of the analysts.

GBP/USD 4 Hour Chart:

Support: 1.2744 (S1), 1.2658 (S2), 1.2565 (S3).

Resistance: 1.2922 (R1), 1.3015 (R2), 1.3101 (R3).

The Brexit positive headlines build the investor’s confidence; we expect a bullish trend for Cable.