GBP Choppy In Headline-Driven Markets
We saw GBP taking a hit on a report in the financial press suggesting Labour will vote against a Brexit deal - these comments attributed to Emily Thornberry who has predicted the lack of a viable plan from the Tories will put the PM under pressure. The report saw Cable hit back under 1.3000, while EUR/GBP pushed back to 0.8930, where some intraday offers standing firm and keeping the cross rate in a very tight range.
Then came comments from Dominic Raab who said that there has been progress in the Brexit talks with the EU's Barnier, though there remain some substantive issues which need to be addressed. This then sent Cable up to fresh highs on the day just above 1.3140 but was hit back down just as quickly, with EUR/GBP bouncing off bids seen under 0.8910 to settle in the middle of what is a very tight range on the day.
Whichever way the current bias lies, gains in GBP have been largely of a corrective nature, with short covering having largely facilitated this recovery.
We will continue to focus on EUR/GBP, which as we have been noting all week, has been carving out a base ahead of the 0.8880-90 area. A push above 0.8930-40 will strengthen this view in the near term only.