GBPUSD, H1
Sterling is underperforming today, presently showing a 0.4% decline on the Dollar and over a 0.5% loss to the Euro, correcting some of the advance seen yesterday in the wake of solid UK retail sales data as markets refocus on the reality of significant Brexit uncertainty while defocusing from fundamentals.
Cable printed a low at 1.3178, which is 119 pips below the 2-month high seen yesterday. Former Brexit minister David Davis said there are 40 “rock solid” Tory party Eurosceptic MPs who will vote down Prime Minister May’s Brexit proposal, which is significant as, with the Labour Party against May’s proposal, there would be enough votes for it to fail in parliament. They will use the upcoming party conference (September 30 – October 3) and the vote in parliament, due before year-end, to try and derail the proposal. This is significant. With the Labour Party against May’s proposal, there would be enough votes for it to fail in parliament. Davis argued for a Canada+ deal, which is basically a more conventional third country trade deal, though the major block to this is how to meet the political imperative for a free-flowing border between Ireland and Northern Ireland. Labour would also be against this (favouring a soft version of Brexit), and it also seems unlikely that there would be broader support in the Tory party, which could mean there will have to be another referendum or general election.
Cable fully retraced today after yesterday’s post-data rally, while the continuation of volatile trading seems assured with overall risks to the downside as long as there continues to be a lack of progress in Brexit negotiation.
Next Support levels within the day for Cable are S1 from PP analysis at 1.3170 and the mid of S1 and S2 which coincides with 200-period EMA in the hourly chart, at 1.3120. Immediate Resistance comes at PP level at 1.3235.
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Andria Pichidi
Market Analyst
HotForex
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