The pound continues to post solid gains in the European morning
Cable is up by more than 100 pips now as gains close in on 1% with price now breaking above the 200-hour MA (blue line) @ 1.2183 in a move towards the 1.2200 handle.
Beyond that, further resistance is seen at the 76.4 retracement level at 1.2227 before minor resistance is observed around 1.2250. The 27 August high at 1.2310 will then be the next key spot to watch out for in terms of a further upside break.
At this stage, rebel/opposition lawmakers are continuing to feel good about their position after passing the motion yesterday to seize control of parliament.
They are likely now to be able to pass a bill to seek an extension to Article 50 to 31 January 2020 but will they have enough time to turn the bill into law and get the government to comply with that? That remains to be seen.
Remember, all this needs to be done before Boris Johnson prorogues parliament possibly by next Monday.
Meanwhile, Boris Johnson's election bid looks to be dead-on-arrival and that will be a setback to him and another boost for those hoping that a no-deal Brexit can be avoided.
As mentioned earlier, today may see another day in which the pound gets a much needed reprieve but complications in the days ahead could mean that we may be staring back down at a potential no-deal Brexit down the road still.
I reckon the risk-reward play here is to look for shorts at the extremes - closer towards 1.2300 and anything beyond that - as buyers get a bit overconfident about the "diminishing" odds of a no-deal Brexit (it isn't going to go away) and potential election risks.
