UK Headlines All Point To Fresh Brexit Uncertainty, But GBP Takes No Notice
We have had a number of Brexit headlines out this morning, but it seems there is little being said that will unnerve traders - in Europe at least. Overnight, we saw a gap lower in the Pound on reports that Theresa May's Chequers plan was under facing criticism and ex-cabinet member Davis was urging a rebellion, along with news that talks were on pause until the EU leaders meeting on Wednesday.
More recently, the DUP have suggested that a no deal outcome is still probable, but Irish PM Varadkar continues to strike an optimistic tone as he says this is unlikely. One thing which is noteworthy is that it seems the UK is taking a hard stance and that the PM will be under pressure stand her ground. Many MPs, including her allies Raab and Gove are moving in line with the 'rest of pack', insisting the UK has made enough concessions.
Despite this, GBP is still trying to push higher, with some of the opinions that even in the event of a no deal, provisions will be made by both sides to make the initial withdrawal as orderly as possible and without any major disruption for either side. Is this now the new 'soft Brexit'? Maybe.
We will know more at the end of the week, though for now, Cable has closed the gap from the weekend and EUR/GBP is close to doing the same.
We now see support levels in EUR/GBP if the cross rate makes a stronger move below 0.8800, getting stronger the closer we get to the 0.8750-30 area.
Cable resistance comes in ahead of 1.3200, with offers anticipated at circa 1.3185, though these will likely be tested if the US data comes in on the softer side of expectations this afternoon - especially with the USD on the back-foot already.