Brexit giveth, Brexit taketh away
Cable is looking to close the opening gap higher on the day as the pound continues to inch lower ahead of European trading. The pair opened higher to begin the week following headlines of a Brexit deal being ‘almost done’. The report was quickly denied over the weekend as it was released but with things like this, leaks are very common — and more so when an actual deal will soon be coming.
Either way, the optimism has been tempered with as we begin the week with Raab insisting on a hard line being drawn on the Irish backstop/border issue. However, I’m still thinking there’s more to the weekend story to that we’re not hearing just yet and the early price action here is a sign of things to come if Brexit headlines begin to shift to a more positive direction.
While concessions can be made from the EU or the UK, it remains to be seen if May can champion a deal that will be approved by parliament. And I believe Raab is trying to get her across the finish line with that regard. At this point, the setbacks are beginning to turn into cautious optimism and unless the EU comes out to vehemently deny progress in Brexit negotiations, it’s hard to see much other negativity at this point — besides the fact that talks continue to drag on for another month.
As for cable, look out for the 100-day MA (red line) in the week ahead. That remains the key resistance level for buyers in light of the optimism over the past few days as price continues to struggle to find a break above that and the resistance region at 1.3050 as well as the 23.6 retracement level @ 1.3067.
If Brexit headlines allow for a break above that, there isn’t much stopping the pair from running into a test of the October and September highs near 1.3300.