Once again the rarefied air above 1.2500 proved too much for GBP/USD , proving the need for tangible Brexit progress.
Recent GBP/USD gains appear to be more reduction of short positions than renewed enthusiasm for going long.
Sterling's rally on Brexit deal comments by EU president Juncker stalled at 1.2582 overnight and the pound has dipped back to 1.2480, just above Friday's NY low at 1.2463 .
Juncker's comments Thursday nL5N26A68Xsuggested the mere possibility of making a Brexit deal if an acceptable replacement to the Irish backstop could be found -- a big "if." As of the last Friday's IMM spec data release GBP/USD spec positioning stood at -92,233 contracts just below the recent trend high -102,702 in early August.
Though there has been little credible momentum toward a Brexit agreement, parliament's removal the no-deal Brexit option and the reduced likelihood of UK elections before Oct.
31 diminish the chances of Britain crashing out of the EU alleviated bearish GBP/USD sentiment and should keep it relatively well bid, just not above 1.2500.
Despite today's weakness, with GBP/USD holding above the 10-DMA at 1.2426 and the daily cloud at 1.2399 bulls continue to exert control, but a rise above 1.2670, the 50% Fib of 1.3380-1.1959 and the 200-DMA by 1.2737, will be needed to shift momentum firmly to the bulls.
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