FX Strategists at Scotiabank noted Cable should now face strong resistance in the 1.3260 region.
“Sterling is little changed on the day and heading for a modest gain on the week amid hopes that the EU and UK are moving closer towards a deal that can be showcased at next week’s EU summit. We still rather think the road to an agreement is highly uncertain as plans appear to revolve around the UK remaining in an effective customs union with the EU indefinitely after 2020. That is hardly equates to even the basic notion of “Brexit” and if it is PM May’s intention to push ahead with this idea, it may struggle to get through parliament”.
“Sterling has failed to follow through on steady demand that has emerged the past few days and looks technically vulnerable intraday now. The 6-hour chart shows a bearish “shooting star”/outside range forming through the London trading session. That suggests more pressure on support at 1.3185 near-term (and strong resistance now at 1.3260). Below 1.3185 near-term will point to a return to the low 1.31s at least in the next day or so”.
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