GBP falls to a session low against the USD and EUR
Brexit headlines have toned down a little as we begin the new week but plenty of focus still is on Theresa May and whether or not she can get her Brexit deal through a meaningful vote in parliament. There isn’t much negative news that I can point to for the decline here but Trump chiming in on the matter isn’t really helpful in any case.
Looking at price action, cable is struggling as buyers are unable to muster a breakthrough of the key hourly moving averages since overnight trading. As a result, the pound now moves to a low of 1.2804 and looks to be headed for a test of the 1.2800 handle again.
Although sterling will still continue to trade based on Brexit headlines, from a technical perspective the chart above shows a narrowing wedge being formed. Much like a spring being coiled up, expect a quick jump on either side of a break in the wedge pattern when the time comes.
And as mentioned yesterday, the closer we head to a meaningful vote in parliament with very little convincing signs that May will win, the more we’ll see markets bet on the fact that we’re headed for a period of uncertainty and negativity (lower sterling) as chances of parliament shooting down the deal remains high.