GBP/USD touches a high of 1.2861 on the day
It’s still all about Brexit for the pound but traders so far are beginning the day in a more cool, calm and collected manner. The pound is squeezing out some gains across the board but I don’t expect the optimism here to lead towards any key technical breaks if they are not supported by fresh developments in the Brexit saga.
The latest is that Theresa May could be headed for a confidence vote as letters needed for that to happen are reported to be building up. The Sun reported earlier this morning that there are 42 already. The needed number is 48 to trigger the motion.
For now, cable looks to be headed back towards a test of Friday’s high, which coincides with the 50.0 retracement level of the drop seen on Thursday. That will at least keep things in-check prior to a test of the 100-hour MA (red line) @ 1.2892.
I reckon this is still very much the calm before the storm for the pound. Even if there is no leadership challenge to come against Theresa May, the likelihood of parliament passing the Brexit deal at present is still slim. And that sentiment will continue to deny any significant gains for the quid over the next few sessions.