GBP/USD falls to a low of 1.3012 on the day
The pound is getting no reprieve as we close out the week with cable slipping to session lows and EUR/GBP also moving up to a high of 0.8713 and GBP/JPY down to a low of 148.16 on the day. The rest of the major bloc is also pressured against the dollar and yen but the pound is the leading laggard as we begin the session.
A November Brexit deal continues to hang in the balance as Theresa May is set to meet with Cabinet ministers next week. The issue here is that she faces an uphill task of winning over parliament approval in order to bring a workable proposal to the negotiating table with European leaders. If nothing comes about by the end of next week, the timeline will be shifted to December and that is cutting things a little close for a Brexit deal.
As mentioned yesterday, them more time passes without any semblance of a deal, the more we’ll be seeing the pound slip as markets price in the possibility of a no-deal outcome. Now that the near-term bullish bias has been broken (price falling below the 100-hour MA i.e. red line), it’s setting up for a quick trip downwards for cable back towards a test of 1.3000 and the 200-hour MA @ 1.2975.
However, there is still a key risk event to come in a couple of hours with the Q3 preliminary GDP figures to be released. Expectation is for a quarterly rebound from Q2 and that’s the benchmark. Anything worse will only compound matters for a further downside move in the pound at this point and given the backdrop of fading hopes of a November Brexit deal, things could yet get really ugly for the pound if the data misses to the downside later.