Sterling Lower on Negative Brexit Headlines

Sterling lost ground Tuesday, the pound feeling the pressure from a recovering USD along with negative Brexit headlines. Cable eased to a low of $1.2922, after breaking below $1.3000 early in the NY session, with recovery efforts kept shallow, holding below $1.2950 into the close. Asia consolidated Tuesday's losses, though did manage to make a fresh pullback low of $1.2921 in earlier trade. Sterling retained an underlying heavy feel, reaction to further negative Brexit headlines(draft piece from the EU suggests no break through in talks) extended Asia lows to $1.2915, with opening Europe pressing it on to $1.2906 with recovery efforts remaining laboured. PM Johnson is said to be considering a circuit break COVID lockdown, which could close the country down for a period of around 2-weeks if implemented. Focus remains on tomorrow's Oct15 Brexit deadline, with the EU Summit Thu/Fri to discuss the negotiations along with its EU recovery funding. A lot of market react headlines expected but hopes that there are moves behind the scenes to move talks to the next level with a possible agreement by the end of the year. EUR/GBP has moved back above its key technical 10-dma(currently at Gbp0.9084) which if holds turns outlook bullish and will place further pressure on the pound. Cable support seen into $1.2900, $1.2880, $1.2850, $1.2830. Resistance $1.2940/50.

MNI Techs: GBPUSD faced resistance Tuesday at 1.3083, Oct 12 high. Cable initially traded close to a key resistance at 1.3139 Tuesday. This marks the former trendline support that was breached on Sep 10 and intersects at 1.3151 today While this resistance remains intact, recent gains are likely a correction. A clear breach of 1.3151 would strengthen a bullish argument. The key support to watch to signal a reversal lower is 1.2846, Oct 7 low.