With no Brexit solution in sight, the Cable remains under pressure, falling briefly below 1.20 earlier this morning, ahead of the much-awaited resumption of the British Parliament. In addition to the early-day headlines suggesting the Brexit negotiator’s dislike for the EU’s refrain from altering Irish backstop, the Cable was just another victim of the US Dollar’s strength. Additionally, the alliance formed by Labour, Liberal Democrats and some Tory rebels will try to put forward a motion to win over the Common’s support for a bill that would require the PM to seek Brexit extension until January 31 if he fails to geta deal with the EU before October 19. However, PM Johnson repeatedly conveyed the message that October 31 would definitely be the final date to leave the EU, with or without a deal. Looking forward, market sentiment will stay sensitive to any Brexit headline, as well as to the UK Construction PMI, which will be released later in the day.
The Sterling bears are attempting to break below a major psychological figure, 1.20. If they succeed, then the bulls should be cautious of a much bigger drop towards 1.19 and 1.1850. If the bulls were unable to protect 1.20 with everything they have, then the bears will take over and we will be treading in their territory in the upcoming sessions.
Support: 1.2020 / 1.1985 / 1.19
Resistance: 1.2080 / 1.2175