TECHNICAL ANALYSIS

Pound stable during the session, Brexit still at the center of concerns


GBP / USD a little higher towards 1.2940

GBP / USD S1 16-10
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The market is starting to position itself for Boris Johnson to announce an extension of trade talks with the EU later today, and more so now following comments from Dominic Raab that “there is a chance” for a deal. on Brexit and that they are “close” to one.

It’s kind of a giveaway that Johnson will explain later today, but then again, you can’t really rule out the potential for a surprise. In this place, the risks are somewhat skewed downward as to what Johnson might announce when the time comes.

GBP / USD moved back above 1.2900 and above the 23.6 retracement level of the swing movement lower yesterday. Further minor resistance is seen closer to 1.2950 then, but the 200 hour MA (blue line) @ 1.2965 will provide more challenge for buyers.

Just above that is the 100 hour MA (red line) at 1.2984 and these short term key levels will be one to watch in case we see an upward movement before we get to 1.3000.

The extension of Boris Johnson’s talks may offer a silver lining, but it comes at a time when talks are pretty much on the edge of a knife. We are no closer to a deal than at the start of the year and with Brexit nothing is agreed until everything is agreed.

I would argue that if the pound rallies to Johnson’s bullish trend as he extends the ‘deadline’ – whatever that really means in the world of Brexit – any gain may be short lived.

For now, as the pound climbs higher, just be aware in case the market tries to push the news further and turn this into a “buy the rumor, sell the fact” event.

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