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Pullback Considered Corrective


Holding Above Recent Lows


BLOCK, Large 3Y Midcurve Put Condor

Sterling Buoyant Ahead of EU Summit

MNI (London)

Positive risk allowed cable to extend its recovery above $1.3000 Friday, the rate pushing to a high of $1.3050, closing the week at $1.3046. PBOC tweak in the reserve requirement for some FX forwards was seen applying brakes on recent CNY/CNH appreciation which in turn saw USD marked higher into Asia. Cable opened at $1.3016 before it settled through the balance of the Asian session between $1.3020/40, pushing through Friday's high at the Europe open to $1.3057. Focus on this week's EU Summit on Oct15/16, covering PM Johnson's deadline for a trade agreement of Oct15. However, market suggests that despite soundbites concerning the deadline, there is optimism that talks to continue through to the end of October, after the EU signal a move into the 'tunnel', with hopes of an agreement by year end. Resistance noted between $1.3070/80 ahead of $1.3100. Support $1.3020 ahead of $1.3000. Rate closed Friday above its 55-dma which could add to some technical positivity. A light UK data calendar Monday, attention on BOE Haskel(1500BST), then BOE Bailey at 1700BST. Brexit and US fiscal headlines remain key directional drivers.

MNI Techs: GBPUSD cleared key resistance at 1.3007 Friday, negating recent bearish signals and confirming a resumption of the current bullish cycle. This has opened 1.3079 ahead of 1.3128. The former is a Fibonacci retracement and the latter marks the former trendline support drawn off the Mar 20 low. To re-engage with any bearish themes, Cable needs to break 1.2846, Oct 7 low. This would open 1.2806, Sep 30 low.

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