The British Pound dropped on Friday as UK political uncertainty continues to unravel. The EU is preparing for a huge aid package for Ireland in case of a no-deal Brexit. However, PM candidate Johnson seems less impressed by the EU’s efforts and continues reiterating October 31 deadline while signaling options of the Irish backstop. Diplomats from the EU and Ireland are currently holding private talks with Boris Johnson’s allies to secure a good deal, comprising Irish border issues, if Mr. Johnson turns out as the British PM during the mid-week. On the other hand, some of the key Tory members, including UK Finance Minister, Phillip Hammond and Secretary of State for Justice and Lord Chancellor David Guake, stand ready to resign if Johnson becomes the PM, adding additional noise to the political pessimism at home. With the lack of macroeconomic data, the market will continue moving on any new Brexit headline in today’s session.
The Sterling pulled back towards 1.25 on Friday after reaching after reaching an important resistance level, 1.2560. 1.25 and the 50-day moving average are acting as a support for now, if however, the bears break below it we will likely see further weakness taking price towards 1.2450 and possibly beyond. On the other hand, if the bulls find the required momentum, they could push the Cable back towards 1.2560 for a retest.
Support: 1.25 / 1.245
Resistance: 1.2560 / 1.26