GBP/USD falls to a low of 1.3061 on the day
If something can’t go up on good news, well… It’s going to be headed to the other direction more often than not. The pound should’ve gotten a relief as Brexit got extended by another six months, preventing a no-deal outcome. However, the fact of the matter is that there isn’t any clear solution to break the current impasse and that isn’t going to help sentiment regardless of how long Brexit is extended for.
Come October, we’ll behaving the same conversations once again with the can potentially getting kicked down the road to next year.
Much of the optimism of an extension has been baked into price throughout the week and now we’re seeing some exhaustion as cable falls to test the 100-hour MA (purple line) once again. If price breaks below that, the near-term bias will turn more bearish.
Further support is then seen around 1.3050 and then levels around 1.3030. Meanwhile, any upside extension remains capped just above the 1.3100 handle with resistance around 1.3120 proving to be a key level that buyers can’t break out of.
As Brexit continues to sit in limbo, we may just have to settle for a similar choppy and directionless price action in the pound for the time being.