The pound remains extremely sensitive to ongoing Brexit developments
The latest headlines here are what is driving the pound lower in European morning trade today, with cable falling from 1.2930 to a low of 1.2874 on the news flow.
If anything else, it underscores the fragility of the currency at this point in time but it also hammers home the point that any concrete or firm agreement from talks this week is arguably not likely to materialise.
Both sides may pave the way for some compromise over the next two weeks, and that is arguably the best one can hope for from talks over the last few days.
In any case, the pound reaction so far has been modest despite the setback.
The drop in cable still sees it keep well above yesterday's lows and not quite moving towards a test of the key hourly moving averages.
The 100-hour MA (red line) stands @ 1.2838 and that is the key spot to watch if sellers are to try and chase for any downside momentum in the sessions ahead.
As for buyers, keeping above 1.2900 would keep the confidence flowing with price action earlier looking to eclipse the highs from yesterday.
But the 1.3000 handle is still the key level limiting any real upside momentum, and that will likely only give way if there are positive Brexit news to follow ahead of the weekend.
Back to the current price action and the reaction to the Brexit news, I reckon we may need either more headlines or a change in risk flow to really shove cable in either direction more significantly. We are seeing a modest reaction so far, but nothing major as of yet.
