Cable falls to a session low of 1.3070
The high today touches 1.3124 but once again pound buyers are struggling for any solid momentum as they fail to breach the 100-hour MA (red line) in the upside move.
Since then, cable has been on the retreat and price has now eased below yesterday's low to 1.3070. Further support is now seen closer towards 1.3050-54.
The move lower is also coming as EU chief Brexit negotiator Michel Barnier is highlighting a few things about the future trade relationship negotiation:
- IF UK wants zero tariffs and zero quotas, there has to be zero dumping too
- Level of access for UK products to EU markets will be proportionate to level of ambition on keeping with EU standards
- There can be no agreement on a deal on the economy and trade with the UK without fisheries and a level playing field
I doubt his comments are having that much of an impact but it is something to take note. His tone is a bit less than cordial as he is implying that the UK can't just waltz into negotiations and hope to get everything done - quick and easy.
Anyway, back to the pound. As long as there is going to be potential hiccups to future trade negotiations and the fact that no-deal risks remain on the table, I can't help but think that the currency may struggle for any meaningful upside.
Economic data will regain some importance moving forward but at the end of the day, it is still all about Brexit - especially once we move along the year ahead.
For cable, price appears to be breaking out of its triangle/wedge pattern:
That could hint at an extension to the downside, especially with sellers keeping near-term control. However, I'd be more comfortable on a break below 1.3050 but also below the 1.3000 handle as I reckon the figure level will see some buyers step back in.
