GBP/USD keeps around 1.3000 on the session so far
The pair looked to be drowning yesterday as it was dragged lower to test some near-term support around 1.2920 before buyers latched on to a Bloomberg piece that a Brexit deal could be reached by early November.
That saw a jump to 1.3000 before price action consolidated just below that and has been trading in and around the figure level since.
Buyers tried to make a play early in the session to test the key hourly moving averages, but that failed and sellers retain more near-term control for now.
The Brexit report yesterday said that EU and UK negotiators have ‘made progress toward resolving some of the biggest disagreements in Brexit talks’ and that ‘a deal by early November is possible if differences can be bridged’.
Pardon me for my continued Brexit skepticism, but progress isn’t necessarily signs of a breakthrough and I still hold doubts that significant concessions will be made to finally bridge the large divide between the two parties – not this early on at least.
As such, the pound may get riled up on Brexit hopes once again but we all saw how that can easily fade as seen with what happened after the pop last week to 1.3177.
Looking beyond that, the US election is the other key risk factor to be mindful about and there’s going to be much uncertainty all the way until 3 November and maybe even in the aftermath, should there be complications to the results.
Either way, the market has had its chance to run with the complacency in recent weeks but it hasn’t really done so now that we’re in the home stretch.
As such, I would argue that the dollar may well keep steadier in the next few sessions and that is likely to limit any significant gains in cable, all other things being equal that is.
The confluence of the key hourly moving averages @ 1.3025-28 is the key region to watch ahead of the weekend, with further resistance seen closer to 1.3047-50 and then the recent swing highs closer to 1.3075.
Those near-term levels are likely to keep any upside momentum in-check unless Brexit headlines threaten to change the pound trajectory in the day ahead.
As for downside momentum, sellers are looking to take a bit of a breather as stocks are retracing a bit of the sharp selloff seen yesterday. So, that may limit any scope for a strong downside push unless the selling resumes before the election.