- GBP/USD benefits from the news that the EU is ready to allow a three-month Brexit extension to the UK.
- French push for a shorter extension mostly ignored, no renegotiation of the deal permitted.
- A formal announcement and the UK’s response will be closely observed for fresh impulse.
With rising calls of the EU’s readiness to announce a three-month Brexit extension, the GBP/USD pair stops recent downside while taking the bids to 1.2825 at the start of the week’s Asian trading session on Monday.
The Guadian recently ran a story suggesting that the European Union (EU) is preparing to sign a deal that will offer a three-month Brexit extension, to January 31, 2020, with an option for the United Kingdom (UK) to leave earlier if a deal is ratified.
The news report turns down the scope of any renegotiation to the recently agreed deal while leaving the door open for exit on the first day of the month after a deal is ratified.
France pressed for a shorter extension till November 15 but the same is absent from the leaked document mentioned by The Guardian
“It is also says the UK has “an obligation” to nominate a candidate to join the European Commission. The prime minister has previously said he will not put forward a nominee,” says the Guardian.
With the EU on its way to turning down scope of no-deal Brexit, a formal announcement will be awaited during Monday’s EU/British session to trigger drama in the UK where signals for snap elections will be flashed.
It should also be noted that the US Dollar (USD) mostly benefits from the recent positive sentiment surrounding the US-China trade talks and has Chicago Fed National Activity Index for September, -0.37 expected versus 0.10 prior, up for publishing on the economic calendar.
Technical Analysis
The Cable bounced off 23.6% Fibonacci retracement of its latest run-up since early-October, which in turn increases the odds of a fresh rise towards 1.3000 round-figure. On the downside break of 23.6% Fibonacci retracement level near 1.2820, June month high nearing 1.2785 and 38.2% Fibonacci retracement close to 1.2700 will be on sellers’ radar.
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