GBP/USD touches a high of 1.3063 and moves away from a key resistance level
Cable is on the move again as with most other major currencies as the dollar and yen slips across the board. EUR/USD is up to a high of 1.1620 while USD/CAD has moved lower to 1.3134. AUD/USD and NZD/USD are also at session highs of 0.7128 and 0.7092 respectively.
As for GBP/USD, the pair now looks to be moving away from the key resistance level at 1.3043. That was a level which stalled the upside move in the last week of August. Further resistance is seen around 1.3083 with offers and swing region resistance around 1.3100 being the next key level to eye for.
The pound remains underpinned as it rises to a five-week high against the dollar following Barnier’s comments overnight here. Again, I may be a bit too skeptical but I really don’t believe that his comments there has meant a significant change in the Brexit stance. But charts don’t lie either and right now it is strongly favouring the pound over the dollar.
Momentum is clearly with buyers and that is something that you can’t argue with. And if price holds above 1.3043, I reckon there’s further room to the upside still for cable.
The EU may be starting to be a bit more flexible in negotiations but if May can’t convince the UK parliament to go with her Chequers plans, then there’s a risk that negotiations may stall once again. And that looks to be an increasing possibility in my opinion, but we’ll get there when we get there.
For now, perky pound is making a comeback and the squeeze could have further room to run. Looking at CFTC positioning, the pound has been heavily shorted all the way since April until now into a relatively stretched net short position:
That gives reason to believe that there could be some money slowly being taken off the table for now and is another reason to suggest a further squeeze higher in cable in the near-term.