GBP Set For A Roller Coaster Ride? PM Gathers Cabinet For Crunch Talks
At the moment, GBP is enjoying a temporary period of calm, but today is the day the PM gathers her Cabinet at Chequers to try and find some common ground on which to build and present a Brexit plan to the EU. Divisions within her government have hindered progress in the exit negotiations, and it is no secret that the EU is becoming ever more frustrated. The clock is ticking towards the March 2019 deadline at which point the 2 sides will hopefully be making plans for the 'divorce', which has taken many twists and turns reflected in GBP volatility.
Given the red lines between the Brexiteers and the Remainers, let along the UK and EU, it is hard to see a concrete agreement being reached today, and we are seeing optimism being stretched once again. Even so, GBP has lost a lot of ground, and remain relatively weak across a range of currencies, not least of all the EUR, which has been having its own crisis of confidence lately. Cable losses have been diluted with a heavy concentration of USD strength, but here we have seen support coming in ahead of 1.3000 after a near 14 cent drop in the space of a few months.
A fresh breakdown in talks today will naturally call the government's light grip on power into question, with fears of resignations and fallouts a key risk which could spread into the weekend. Talks are set to be in process through the day, and the marathon debate will keep GBP readers on edge with the added distraction of the key US jobs data this afternoon.
Key levels on the upside in Cable start from 1.3370-1.3400, while on the downside, we saw strong bids for evidence from 1.3100. EUR/GBP found support bang on 0.8800 when GBP responded to the better than expected UK services PMIs were released earlier this week, so on the top side now, 0.8900-20 is an area which we see an initial key resistance. 0.9000 will be psychological more than anything else if we push through.