The pound is a touch higher on the day on Brexit hopes
Cable is moving in on a test of the 1.2800 handle once again as the pound is keeping higher so far to start the new week with all eyes on Brussels ahead of the latest Brexit showdown between the UK and EU.
Joint committee talks are scheduled to take place today before the usual negotiations on Tuesday through to Thursday. Then on Friday, Barnier will have a meeting with Frost but expect any progress or setbacks to be 'leaked' over the next few days.
There are hopes that both sides will reach some light compromise ahead of the key 15 October deadline, but there is also pessimistic tones abound.
For now, the pound is sticking with the former as we see cable move towards 1.2800 in European morning trade. The figure level stalled the advance on Friday last week before sellers drove price back down to test the 1.2700 level.
But to the downside, 1.2700 and daily support from the key daily moving averages are keeping intact and is preventing any further capitulation in the pound.
That will be the major support level to watch for cable should we see Brexit pessimism flow through to drive any push to the downside.
As for upside potential, getting above 1.2800 will be the first step for buyers but there is still more work to do. The 200-hour MA (blue line) @ 1.2832 is the next key near-term resistance level to watch if buyers are to try and establish a more bullish momentum.
As things stand, Brexit is the key risk factor for the pound this week so with the near-term bias also sitting more neutral now, it shows that the next directional push in the pound can be either side - much like how Brexit talks may pan out this week.
