Technical Analysis

Cable slips to session low on weaker pound

GBP/USD moves to a low of 1.2662 on the session

The pound is still feeling a bit of a pinch since overnight trading after Labour’s motion to block a no-deal Brexit outcome fell short in parliament yesterday. Tory MPs cheered the result, which is rather ironic given how little support they offered Theresa May under a similar scenario just months ago really.

But with the voting result yesterday, it basically paves the way for a new British PM to pursue a no-deal outcome if they so choose to.

Cable buyers tried to move back above the 200-hour MA (blue line) in trading earlier today but sellers remained firm in keeping the bearish near-term bias. That is leading to a further extension to the downside now with support around 1.2661 being tested. Further bids are only lined up around 1.2645-50 next.

As mentioned several times in the past, the Brexit equation hasn’t changed one bit. The European Union is adamant on not renegotiating the withdrawal agreement, hence it’s either parliament somehow finds a compromise on the current Brexit deal or we’re headed towards a potential no-deal outcome.

If the new prime minister wants to avoid the latter, then a general election – which I see as being most likely – or a second referendum will be the other options.

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