The pound is weighed lower by Brexit concerns
Reports that the UK is threatening to break the Brexit agreement ahead of crucial talks is leading to a softer pound to kick start the week, with UK PM Johnson also floating the idea of a no-deal Brexit by October not really helping.
That is seeing cable slip to a low of 1.3198 earlier but buyers are keeping a defense of the 1.3200 level for the time being – as seen on Friday as well.
Sellers remain in near-term control though, as they pushed price action back lower since the end of last week on a defense of the 200-hour MA (blue line).
But a firm break under 1.3200 is needed to extend the downside momentum, otherwise buyers are still very much “in the game” for now.
The start of the week may be a tricky one to navigate with US on holiday, so that is leaving little to be desired in terms of interpreting the risk mood in the market.
In that lieu, the dollar side of the equation will take time to sort itself out until there is firmer direction – hopefully – come tomorrow.
For now, there are a couple of near-term levels to watch out for in cable at least.
To the upside, the key hourly moving averages @ 1.3293 and 1.3315 will be the resistance levels that may help to provide sellers with an area to lean on.
As for any downside pressure, the 1.3200 handle is key for buyers to defend on the hourly and daily close with the Friday low @ 1.3175 also one to watch out for.
In terms of fundamental shifts, just be mindful of more Brexit headlines that may follow and expect continued volatility in the pound to such news throughout September.
