GBP/USD slips towards day's lows as Brexit optimism gets tempered with

Technical Analysis

Author: Justin Low | gbpusd

Cable falls from 1.3070 to 1.3030 levels

GBP/USD H1 21-02
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That comes as Reuters reports that a UK government source is seen saying that they are still far away from getting the needed concessions on the backstop and that they are unlikely to be able to secure a Brexit deal by next week.

The headline there does indeed pour cold water on optimism seen in overnight trading where pound buyers were getting more hopeful that a deal will be struck. But that's just about it I reckon. All the headline does here is take away that hopeful optimism and the pound will be left to fend on its own around the 1.3000 handle as we await Brexit developments in parliament next week.

For cable, this does little to change the way things are shaping up technically. Price is still more bullish in the near-term as it holds above both key hourly moving averages and price action still holds above the 1.3000 handle.

I want to be bullish on the pound on the back of Brexit headlines and look for a meaningful bullish break but that is proving hard to come by when rumours/reports are still jerking it around in a volatile manner.

In the big picture, not getting a deal next week doesn't change things materially as May's plan is to try and secure a deal during the EU Summit in March. However, there is some near-term risks that parliament may wrestle control from her to take charge of the Brexit process so that is something that traders need to be wary of.

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