- The UK government and EU agreed a flexible extension (flextension) to the Brexit negotiation process last week, which avoided a “no deal” Brexit, which would normally be expected to be positive for the Pound.
- However, Sterling has been paralysed with muted directional progress versus the UD Dollar or Euro since the extension was agreed.
- This has likely reflected the threats of a change of leader with the governing Conservative party, a potential new General Election (and possibly a Labour Part y Government) or another referendum.
- GBPUSD has been caught within a narrow band for the past week (1.3028 to 1.3133), with a slight bias to the downside.
GBPUSD bias still lower
A small rebound and Monday but still capped by 1.3133 after Friday’s failure from here (just above our 1.3122/30 resistance area), to leave a negative bias and to just keep risks back lower for Tuesday.
The aggressive, mid-March advance through the late February peak at 1.3350 switched the intermediate-term outlook to bullish.
- We see a downside bias for 1.3028; break here aims for 1.2985 and 1.2976, maybe key 1.2947.
- But above 1.3130/33 opens risk up to 1.3196.
Intermediate-term Outlook – Upside Risks: We see an upside risk for 1.3473.
- Higher targets would be 1.3608 and 1.4000
- What Changes This? Below 1.2947 shifts the intermediate-term outlook straight to a bear theme.
4 Hour GBPUSD Chart