GBP/USD falls to a low of 1.3076 on the day
And price is threatening a break of the 100-day MA (red line) @ 1.3094 currently. Theresa May is reported to be angling towards extending the Brexit transition period by another year (something which the EU is fond of) in order to break the stranglehold that we’re seeing in negotiations right now.
While making progress with the EU is good news, such a move won’t go down too well back in the UK. May’s own Tory party is almost certainly not going to support her with such a decision and she will face more troubles in trying to win over parliament at this rate.
That puts her own position as prime minister under intense scrutiny. And markets know that very much which is why the pound continues to be weighed lower as there is no official word that we’ll see Brexit discussions resuming in November in efforts to solidify a deal.
Currently, the can looks to be kicked down the road to December unless there is something substantial that will come about in the coming days/weeks, the pound can look forward to plenty of jittery moments to come. While previously no news is good news for the pound on Brexit, at this stage it’s quite the opposite. No news is bad news as it means there isn’t any progress towards a deal by November and possibly December.
As for cable itself, the pair continues to fall after breaking below the 200-hour MA (blue line) in trading yesterday and that means near-term price bias has turned more bearish. For sellers, they will be looking to break below the 100-day MA and the 1.3100 handle in trading today.
There will be a risk event coming up for the pound with retail sales data due at 0830 GMT. A poor report will only exacerbate further worries for the pound while a solid report may see a bounce, but given the Brexit rhetoric, it’s an easy fade the move play for sellers at this point in time.