Trade Talk Extension Dampens Sterling Enthusiasm

Opening Asia reacted to the extension to trade talks between the UK and EU, agreed by UK PM Johnson and EU President von der Leyen, taking cable to a posted high of $1.2961 in very thin conditions. However, momentum quickly faded and rate eased off to $1.2916 before it gained another reactive lift as Asian markets reacted positively to news that US President Trump could be released from hospital as soon as today. This along with hope for progress in US fiscal negotiations, acted to take cable back to $1.2954 then settled around $1.2940 through to the European open. Early Europe has pressed rate down to $1.2923 as traders analyse the weekend talks, seeing work still needing to be done before it can be said both sides have entered the tunnel toward an agreement. Oct15 is EU Summit and the UK deadline for a deal. Data focus today on UK final Svcs PMI at 0930BST and USD non-Mfg ISM at 1500BST. Risk to be gauged on Trump health and US fiscal negotiations, with an eye on potential Brexit headlines. Cable support seen at $1.2916, $1.2890/80, $1.2850. Resistance $1.2950, $1.2960/65, $1.2980 with stronger interest between $1.3000/10.

MNI Techs: GBPUSD technical signals remain bearish and recent gains continue to be viewed as a correction. The pair though is holding onto recent gains and attention remains on 1.3007, Sep 16 high. A break of this level would undermine recent bearish developments and instead highlight a stronger bullish theme opening 1.3079, a Fibonacci retracement. Price needs to trade below 1.2806, Sep 30 low to expose the bear trigger at 1.2676, Sep 23 low.