GBP/USD climbs to a fresh seven-week high as the pound strengthens amid some weakness in the dollar as well
There was a bit of an inkling that the pound is looking for a potential move higher today, despite the fact that DUP lawmakers have come out to shut down any optimism from an earlier report that there could be a breakthrough in backstop negotiations.
If anything else, I’m surprised the pound didn’t move earlier – particularly on this headline highlighted overnight.
When you tend to see a host of positive stories “leaked”, it tends to play around with sentiment a little despite potential backtracking and that’s what we’re seeing here I reckon.
Technically, cable buyers are also managing something good as they break above the daily resistance around 1.2382 – a level which has been capping gains over the past week.
The key now will be to hold a break above 1.2400 into the weekend. That will allow for a more solid platform to build towards the 1.2500 potentially in the next week (100-day moving average also in focus).
That said, fundamentally, I’m still a bit iffy about how all of this is going to play out. A Brexit extension and avoiding a no-deal is great, but what’s next?
A Brexit deal isn’t imminent nor does a second referendum. If anything else, a general election looks to be most likely but it is almost certainly just going to bring us back to where we are now. Then what?
There’s still plenty of twists and turns along the way but the light at the end of the tunnel remains far away. And that form of uncertainty may yet come back to bite the pound in the backside at the end.