Cable breakout continues as pound surges higher
GBP/USD breaks above 1.2600 and runs away
There's no stopping the breakout in the pound at the moment as cable surges to fresh highs in over three months, breaking above the 1.2600 handle to a high of 1.2663.
Price is now closing in on further resistance at 1.2670 before the 200-day MA (blue line) @ 1.2714 comes into play.
If this keeps up, the pair looks set for its best two-day gain since June 2016. At this stage, it isn't wise to even try to pick a top here because it's all about sentiment.
Even though a Brexit deal may not yet be in the offing and there are still hurdles to pass through, the market isn't keeping their hopes down. This is just about the most optimistic the market has ever been about a Brexit deal and it is clearly showing.
I still reserve some skepticism surrounding a deal but if we end up with an extension, I can see cable holding around 1.25 to 1.27 on hopes that it will lead to something good.
And if we are near some semblance of a Brexit deal, even at these levels, I would view cable as being cheap. If Johnson pulls off a miracle as such, I reckon 1.30 would easily be the first target before 1.35 in cable.
But let's take one step at a time, shall we?