GBP/USD: Under pressure as dollar firms, cable weighed by Brexit angst
|- GBP/USD is currently trading at 1.3031 between a range of 1.3030 and 1.3121.
- Traders eye Brexit developments although markets turn sour in US and dollar gets supported, weighing on GBP.
Despite a positve start in Asia overnight with the MSCI Asia-Pacific hitting 8-month high as Chinese shares rise, US markets have turned a little stake and US stocks are down on the day, casting a risk-off sentiment across the FX space which is giving the greenback some support which is seeing cable down 0.19% on the day.
As far as Brexit updates go - see here:
- France signals UK could stay in EU for almost another year - FT
- Labour: Need ‘clear change’ in UK's government position for a compromise
- EU is to agree to a further Brexit delay / Brexit draft conclusions: - BBC/ RTRS
- UK lawmakers approve plan to seek delay to Brexit to June 30 - But, EU's Tusk says that's not long enough
- UK May-Corbyn talks to continue next Thursday
In a nutshell, British Prime Minister Theresa May is meeting her German and French counterparts on Tuesday in an effort to secure another Brexit delay ahead of EU ministers that will be gathering ahead of an emergency meeting in Brussels on Wednesday where all 27 members will have to agree to May's request for an extension until June 30.
The pound edged lower after German government spokesman denied a media report that Chancellor Angela Merkel is willing to put a time limit on the Northern Ireland backstop in Britain's EU withdrawal agreement - This followed a pop in sterling due to the BBC reporting that a British Eurosceptic lawmaker had been advised that Merkel was willing to put a five-year time limit on the backstop .
All in all, the markets are braced for either a lengthy delay which would be supportive to the pound, or the prospects of the UK crashing out of the European Union without a deal in place - highly negative for the pound. Back in London, cross-party talks have produced sweet nothing in respect of progress, so far.
GBP/USD levels
Analysts at Commerzbank explained that GBP/USD continues to consolidate above the 200 day ma at 1.2975 – this has neutralised their immediate outlook:
"The erosion of the 20 day ma last week was not sustained and the market is consolidating. Above 1.3217 (25th January high) suggests scope up to the 1.3351/82 resistance. Below the 200 day ma lies the 1.2942 55 week ma and the double Fibo retracement at 1.2900/1.2895, this is pretty solid support that is expected to hold the downside. This guards the recent low at 1.2772. The market recently reached 1.3382 before failing. Should the 55 week ma hold, our overall target remains the 1.3552 200 week ma."
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