The pound loses some ground as the Brexit narrative continues to hint that both sides are still nowhere close to a deal


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Pound buyers are running into some headwinds ahead of the weekend, with Brexit talks still seemingly leading nowhere despite the fact that Michel Barnier will be headed to London this evening to continue negotiations.

Barnier struck a more pessimistic tone when he briefed EU ambassadors earlier and the bloc is going to proceed with contingency measures for a no-deal outcome urgently.

Adding to that is UK PM Johnson now saying that the “likelihood of a deal is determined by the EU”, in other words saying that they will have to move their red lines. On the flip side, the EU is claiming the same thing. So, that’s where we are still at.

The pound has taken a bit of a fall on the session, slipping from 1.3350 levels to a low of 1.3326. Of note, price is now breaching the 100-hour MA (red line) and that will see sellers seize back some near-term control in the pair.

Keep below that and the near-term bias will turn more neutral.

That will open up the pathway towards a potential test of the 200-hour MA (blue line) @ 1.3310 and the 1.3300 handle if sellers are to be more pushy to test the downside.

As for buyers, getting back above the 100-hour MA is the first key test but amid the less rosy headlines, it is tough to see this leading to a break of 1.3400 – the level which has been hindering gains since the start of trading this week.



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