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GBP/USD Firm Into Europe But Needs Brexit Breakthrough to Take on $1.3398

GBP
MNI (London)
  • Negative tones, ahead of the weekend Brexit trade negotiations (EU Barnier in London for face-to-face talks with UK Frost) prompted a move out of sterling and further extended the corrective pullback away from the Thursday high of $1.3398 to $1.3289 ahead of the close (close $1.3311).
  • Suggestions in the press Monday have thrown a better light on negotiations, the Times suggesting that the European Commission has begun to lean on Barnier to get a deal, whilst the Telegraph suggests a breakthrough on fishing is 'close', which has provided sterling with a lift.
  • GBP/USD has been able to edge its way up to $1.3348 into Europe, whilst EUR/GBP has eased away from Friday's late high of Gbp0.9000.
  • Month-end and GBP/USD could benefit positively from fix flows, prelim models have suggested USD sales to be seen. However, Brexit remains the key driver for sterling strength.
  • Resistance noted into $1.3350 ahead of $1.3363, $1.3380 with stronger resistance remaining at $1.3398. A break of this latter level seen dependent on a positive development out of the Brexit negotiations. Support $1.3305/1.3290, $1.3264.
  • UK M4/Lending data due at 0930GMT and provides the morning domestic data interest. US MNI Chicago PMI at 1445GMT.
  • MNI Techs: GBPUSD is trading below recent highs. The outlook though remains bullish. A break of the Nov 23/26 high of 1.3398 would confirm a resumption of the current uptrend to pave the way for a climb towards key resistance at 1.3482, Sep 1 high. On the downside, firm support is seen at 1.3196, low Nov 19. A breach of this level is required to dent the bullish mood and risk a deeper corrective sell-off.
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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