Pound tests $1.30 as cross party talks close to stalling

After gaining ground in the previous week, Brexit woes are once again weighing on demand for the pound.

After gaining ground in the previous week, Brexit woes are once again weighing on demand for the pound. Sterling is out of favour for a third straight session as optimism fades that the cross-party talks will break the current Brexit impasse. 

The fact that the talks between Labour and the government won’t be concluded in time for the UK to avoid the EU elections can only cause further division in the Conservatives. We expect the pound to trade with a negative bias in the two weeks leading up to the EU elections, as they serve as a stark reminder of Theresa May’s failure to deliver Brexit. 

Whilst calls for Theresa May to step down are growing louder, the PM is opting to ignore them. She is insisting on staying put until Brexit is done. Whether her party allows this is very questionable right now.

The pound is trading below its 200, 100 and 50 day moving average. It is currently testing resistance at $1.30 a meaningful break through this level could see $1.2975 tested, before $1.2920. On the upside a break through resistance at $1.3035 could open the door to $1.3080 and $1.3120.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.