GBP and EUR benefit from a new EU/UK deal

  • Sunak and von der Leyen unveil the “Windsor Framework”:  The deal sorts out the issue over trade on the island of Ireland.  
  • GBP and EUR outlook improves: The broader risk appetite remains cautious on major forex but GBP and EUR are performing well.
  • Elsewhere USD is performing well again: As yields rebound, USD is outperforming major forex.
  • Equities give up yesterday’s gains: The rebound of Monday on indices has slipped away overnight as US futures drop back by -0.2%.
  • Metals falter, oil build support: Commodities are mixed today.

A new dawn for EU/UK relations?

Whisper it quietly, but could this be the dawning of a new age of cooperation between the EU and the UK?

Ever since the UK voted to leave the EU in the referendum of June 2016, relations have been fractious, fraught and sometimes downright acrimonious.

Boris Johnson blustered through a botched deal in 2019 but the treatment of Northern Ireland had never been satisfactorily resolved. Red tape, customs checks and the feeling in Northern Ireland that they were outcasts from the mainland of Great Britain.

However, current UK Prime Minister Rishi Sunak has struck an agreement with the EU that seeks to resolve many of the issues. He appeared with EU Commission President Ursula von der Leyen to unveil the “Windsor Framework” yesterday. 

There are various aspects of the deal, but essentially it boils down to having:

  • A “green lane” - for goods between Great Britain and Northern Ireland.
  • And a “red lane” – for good between Northern Ireland and the EU (i.e. Ireland) 

According to Sunak, this seeks to remove “any sense of a border” between the GB and Northern Ireland. This is something that has been so contentious over the year since Brexit and has caused the suspension of the Northern Ireland Assembly (i.e. its Parliament)

Potential stumbling blocks

The Democratic Unionist Party leader, Jeffrey Donaldson did not dismiss the deal out of hand. This is a positive. He said yesterday:

“In broad terms, it is clear that significant progress has been secured across several areas whilst also recognizing there remain key issues of concern.”

Hardline Brexit-supporting Conservative MPs also did not seem to be overly vocal either, at least not yet. PM Sunak has promised to give MPs a vote at “an appropriate time”. So there is still the potential for this to fall by the wayside, although the opposition Labour Party has said that it would back the deal.

This could mean significant positives for UK trade

However, if this can be accepted, it opens far better trading relations between the EU and UK. Agreement over Northern Ireland (if politicians in Northern Ireland and the UK Parliament accept it) with a seemingly cordial relationship between the EU and the UK could be the beginning of a new age.

The EU has already said that it is like to unlock progress on several issues, on science but more importantly on the treatment of UK financial services.

Furthermore, the news of progress in Northern Ireland has been welcomed in Washington. President Biden has long been vocal in his concerns over the Good Friday Agreement (a deal signed in 1997 that ended sectarian violence in Northern Ireland. Does this also open the door to a possible UK/US trade deal too?

GBP and EUR benefit

This news certainly has longer-term prospective positive implications for GBP. Better trade with the EU and potentially even the UK is a positive for the UK economy. 

Near-term we saw an uplift and outperformance for GBP and EUR yesterday. This relative performance has been sustained this morning, even if USD strength is still a dominant factor.


With this GBP strength, the Sterling/Aussie pair is one we are keeping an eye on. The strong run higher yesterday has continued this morning. 

A test of the resistance at 1.7960 is underway. A close above the January high would open a test of the long-term resistance at 1.8274.

With this GBP strength, the Sterling/Aussie pair is one we are keeping an eye on. The strong run higher yesterday has continued this morning. Momentum is strong in the move with the daily RSI in the mid-60s but also with upside potential.

There is initial support this morning at 1.7865 and then 1.7730/1.7780.


We are also seeing EUR strength which is showing through with upside traction in EUR/JPY. A run of higher lows and higher highs has formed in 2023 and the move is driving higher towards the next resistance.

  • Moving averages are turning higher and the 21-day ma is becoming supportive.
  • The daily RSI is consistently above 50 and implies that near-term weakness is a chance to buy.

We are also seeing EUR strength which is showing through with upside traction in EUR/JPY.

Yesterday’s EUR rally moved the pair above resistance at 144.20. This opens the key December high at 146.72.

Initial breakout support is at 144.20 (also today’s low), with 142.15 as a key higher low.

Support and resistance levels for major markets


EUR/USD R2 1.0663
R1 1.0619
S1 1.0581
S2 1.0550
GBP/USD R2 1.2120
R1 1.2067
S1 1.2026
S2 1.1963
USD/JPY R2 138.17
R1 137.45
S1 136.35
S2 135.91


R2 1824
R1 1820
S1 1805
S2 1797
R2 20.84
R1 20.66
S1 20.37
S2 20.07
Brent Crude Oil
BR2 84.15
R1 83.40
S1 81.55
S2 80.90


S&P 500 futures
R2 4034
R1 4005
S1 3962
S2 3947
DAX Index 
R2 15,488
R1 15,382
S1 15,288
S2 15,248
FTSE 100 Index
R2 7953
R1 7940
S1 7893
S2 7870


Data: MT5 / IX One

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