Sterling refusing to give in to Brexit fears just yet
We continue to see the Pound holding its ground, despite losing out a little in the last 24 hours or so. Based on the reports that the UK PM Boris Johnson is now working on the assumption that the talks with the EU will collapse, the market is now focusing on whether he will abide by the Benn Act which requires him to request an extension to the exit data and to what this may lead to. Ultimately a delay brings forward the highly likely prospect of a general election, which will in effect be a second referendum.
Some market participants now feel the chances of leaving the EU at the end of the month without a deal have diminished, and this is leading to dip buying in the Pound which is seeing the Cable rate finding support in the mid 1.2200's for now. The stronger support levels do not kick in until the pre 1.2200 level a little lower down, but this morning we are seeing some upward pressure on EUR/GBP, which is also pushing EUR/USD back towards the 1.1000 level.
The cross rate is expected to find resistance into 0.9000, and this may coincide with demand in Cable, though EUR/USD will also have its say as we grapple with sellers here once again circa 1.1000.
News has been thin on the ground this morning, other than the slightly better than expected industrial production figures in Germany. As such, traders are awaiting fresh news on Brexit, but so far, all we are getting is opinion, so focus is now on the EU and whether they compromise on the UK's latest proposals. According to the recent rhetoric, this seems unlikely.