Cable trades more upbeat after recovery from Friday's brief European dip
Price is back to trading the range between 1.3000 to 1.3100 following a quick fall below the 1.3000 handle at the end of the European morning on Friday. That means that buyers are still in near-term control as price recovers to hold above the 100-hour MA (red line) again.
There's been plenty of talk about a Brexit extension over the weekend and that should lend the pound a helping hand ahead of European trading later. If anything, at least it won't sink the currency unless there's negative headlines that come about.
That said, there are very different tones now in which a Brexit extension may be interpreted. If it is extended because May is able to get a deal through parliament or at least if it seems like that would be the case, then there's a strong reason for the pound to rally. But if it is merely extending with no deal in sight, then it would hardly provide much relief at all.
Considering the fact that Brexit uncertainty has been a massive drag for the UK economy last year, prolonging the matter will only continue to keep the economy on ice over the next few months. And that won't bode well for the pound.
Then, there's also another factor to consider as to whether or not parliament can wrestle back some control of the Brexit process to take out the option of a no-deal Brexit. That will no doubt help to push the pound higher as the worst-case scenario is ruled out.
For now, let's take one step at a time. Before May can get to the meaningful vote, there's the Brexit motion vote to come on Wednesday. Let's see how things will play out there before moving to talks of a Brexit delay.
