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Sep 15 - 10:55 PM

GBP/USD - COMMENT-Sterling Resilient As Cracks Appear In Brexit Deadlock

By Andrew M Spencer  —  Sep 15 - 09:05 PM

Despite stalled Brexit trade talks and low levels of trust in negotiations between Britain and the European Union, economists have consistently believed that some form of trade agreement would be reached nL8N2G42PN.
There is now a glimmer of hope.

Even as the Internal Market Bill progresses through the UK parliament nL8N2G62OV amid vigorous opposition, there is a window for Britain and the EU to find a compromise before it becomes lawnL8N2GA0CN.

The bill caused GBP/USD to fall 3.7% last week, but sterling has been resilient this week, rising 0.8%,

Reuters cites EU sources saying Britain has moved to break the fisheries deadlock, a pivotal issue in the trade talks nL8N2GC3SX.

And the EU is set to extend clearing of euro derivatives by the City of London for another 18 months, which is likely driven by technical considerations, but does at least show cooperation nL8N2GC43V.

These are only baby steps towards a Brexit trade compromise, but mark a potential start, as the late October deadline looms.

Cable charts remain bearish as 5, 10 and 21 daily moving averages fall and 21-day Bollinger bands expand. Major support lies at 1.2721-1.2132, 61.8% of the June-September rise and the 200 DMA, while a close above the falling 1.2993 10 DMA would end the downside bias.

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Source:
Refinitiv IFR Research/Market Commentary

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