- GBP/USD looks to consolidate the breakout of the 1.2100 mark.
- The Sterling stays bid on (vague) hopes of a soft Brexit.
- UK politics now looks to a potential ‘no confidence’ vote.
After bottoming out in the proximity of the psychological 1.2000 handle early this week, the Sterling saw its demand kind of bolstered by renewed hopes of another outcome than a Brexit ‘no deal’ by end of October.
In fact, some UK policymakers are not only supporting the ‘no confidence’ vote on PM B.Johnson sponsored by Labour’s J.Corbyn, but they are also encouraging other MPs to back this motion and, firstly, avoid a hard UK-EU divorce and secondly, open the door to another deal and a potential second referendum (the latter being more of a wishful thinking).
In addition, UK latest inflation figures and the labour market report were not that bad and the rebound in Retail Sales during July surprised markets to the upside, all collaborating further with the upbeat mood in GBP.
Cable then faces the next important hurdle in the 1.2209/14 band, where sit August peak and the 21-day SMA. A more serious rebound should face the next up barrier at the short-term resistance line, today at 1.2380, seconded by the 55-day SMA at 1.2460 and ahead of 1.2578, high July 25. If, on the contrary, sellers regain the upper hand, a break below 1.2000 looks increasingly likely as well as a move to 2017 lows at 1.1985.
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