GBP/USD touches a low of 1.2734 on the day
Price is now threatening a break of the 100-hour MA (red line) @ 1.2745, which would see near-term bias turn more bearish once again. It’s been a bit of a choppy last couple of days for cable with the Brexit rhetoric taking plenty of twists and turns and the dollar itself also seen struggling with rate hike bets on the Fed being scaled back.
There was a bit of a brief spike earlier in cable with price moving from 1.2750 to 1.2775 when the Halifax house price data was released. I highly doubt it was anything to do with that and there isn’t much else to read into that aside from thinner trading conditions as traders are looking towards payrolls data later. One of our commenters posted a link to an FT article on the second referendum, so it could be a mild reaction to that too.
Right now, there’s plenty of uncertainty clouding Tuesday’s Brexit deal vote in parliament. On one hand, there’s talks of a second referendum since overnight trading. It is reported that May has even called to meet with aides to discuss on the matter as well.
And on the other hand, there’s talks that May could even delay Tuesday’s vote altogether as she wants to avoid what looks to be an imminent defeat at this point. If she does decide on this route, it’d be a massive setback in terms of confidence towards the government but she may not have much else of a choice.
With so much on the line and still so much uncertainty prevailing, it’s hard to see the pound pull off any significant gains. But at the same time, certain headline risks and talks of a second referendum is helping to provide some form of momentary relief for the quid in all of this.
Expect price action to remain choppy as this is where things start to heat up and reaction to headline risks become even more heightened. If you’re willing to brave through that, then be sure to limit your risk with technical levels. For me, this is about where I draw the line for cable trades for the week. Rally selling has been rewarding over the past two weeks but with headline risks potentially muddying the picture and NFP to come later, my take is to stay sidelined until things become clearer.