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GBP Boosted by Weekend Brexit Extension, But Market Seen Wary.

GBP
MNI (London)
  • Another 'deadline' brushed aside, with both sides continuing negotiations for a Brexit trade deal, led to a quick move back into GBP at the Asia open.
  • GBP/USD closed Friday at $1.3222, off its earlier low of $1.3135, and was marked up at the Asia open to $1.3265 (technical gap remains on chart at writing).
  • Rate was quickly pushed up to $1.3384 before enthusiasm faded and rate eased off to $1.3290.
  • Pullback attracted fresh demand which allowed rate to settle back above $1.3300 through to the Europe open (current $1.3328).
  • Brexit headlines remain key for GBP direction, no fresh 'deadline' set, with EU negotiator Barnier to address EU ambassadors this morning on progress. EC vdLeyen announced the negotiation extension, no detail given(what incentive) with progress information so far kept very tight.
  • A light calendar in the UK Monday. Focus this week on UK Jobs(Tue), CPI(Wed) and the BOE MPC monpol announcement(Thu, no change widely expected, market will watch for any mention of negative interest rates).
  • Despite this positive react to the Brexit extension, market aware that Dec31 remains the main deadline, with nothing definite until an announcement, and this then has to be ratified by both sides.
  • Support $1.3300/1.3290, $1.3255/50, $1.3230. Resistance $1.3384, $1.3400/12.
  • MNI Techs: GBPUSD remains volatile as Brexit trade discussions are extended once again. The pair is sharply higher this morning erasing some of last week's losses. A bearish theme remains intact though and further weakness is likely. Price last week pressured the 50-day EMA, currently at 1.3193. A clear break would strengthen the bearish case and open 1.3106, the Nov 12 low. On the upside, initial resistance is at 1.3384, today's intraday high.
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets

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