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The GBP/USD exchange rate starts the new week 0.40% higher at 1.2974, despite the gains analyst and technical forecaster Richard Perry of Hantec Markets says the pair will likely struggle to hold ground above 1.30.
A mild positive drift on GBP/USD was curbed last week, but the support holding around 1.2845/1.2860 essentially leaves GBP/USD stuck in a consolidation between 1.2845/1.3080.
A tick back higher this morning will encourage the sterling bulls.
This is a positive reaction to the suggestion from the UK side that agreement over a Brexit trade deal is breaking down.
The market clearly sees this as a negotiation tactic (GBP/USD would be sharply back lower on a confirmed “no trade deal” scenario) and there is still hope for a deal.
Technically, momentum is flat on RSI and MACD, whilst Stochastics are still suggesting a negative bias despite today’s early rebound.
A run of lower daily highs continues, so the bulls will be eyeing a close above 1.2960 (Friday’s high) to begin to improve the outlook.
For now we see positions above 1.3000 as a struggle.
Although no agreement has been reached yet between the EU and UK on a post-Brexit trade deal, there were suggestions over the weekend, that there could be changes to the controversial UK Internal Market Bill in order to ease the log-jam.
Sterling has ticked higher early today.
Markets continue to trade with a lack of certainty as newsflow of major macro factors remain on a knife edge.
However, slight chinks of light over the weekend are generating a mild positive risk bias this morning.
In one final attempt to break a deadlock on US fiscal support, Democrat House Speaker Pelosi gave a 48 hour deadline over the weekend.
It means that the next couple of days could generate elevated volatility on any announcements, but markets are taking this as a positive.
China’s Q3 GDP missed expectations (4.9% actual, versus 5.2% forecast), although other data for September (Retail Sales and Industrial Production) beat expectations to ease any negative aspect from the growth data.
Taking all that in, there is a very slight edge of positive bias to sentiment this morning. US yields are ticking higher, which is translating to marginal US dollar weakness (USD is still very much acting as a safe haven now).
US equity futures are taking a bit of a lead too, but this is coming to balance a disappointing drop into the close on Friday.