A Brief Ray Of Light For GBP
We saw a brief upturn in the Pound a little while ago as reports came through that the European Council (comprised of leaders of the member states) were considering offering a concession to the UK on access to the single market on goods. The news hit social media and was taken to be breakthrough in the talks, but in essence was just a consideration which may be put to the EU Commission and the negotiating team headed by Michel Barnier. The chief negotiator has long maintained that Europe will not risk any fudge on its own red lines, and maintaining the integrity of the single market is top of the list.
The news saw Cable pushing above 1.2900 and into the first layer of resistance we seen above here, though plenty more seen through the mid 1.2900's until we reach the psychological 1.3000 level. Even so, Cable - along with a number of other key spot rates - are looking stretched on the downside, so there was likely an element of short covering here which may have more to go considering we have UK GDP data tomorrow along with US inflation later in the day.
The true gauge therefore is EUR/GBP, which remains in close proximity to the 0.9000 level. Resistance at 0.9035-40 remains intact after an initial test, and the shallow pull-back may suggest more to come, though once again we note the UK data risk tomorrow. Stronger support levels are seen at 0.8950 and 0.8900, though the positive Brexit news may need to have a little more bite to see these levels tested.