GBP/USD – Edges lower as May requests more time

PM hopeful of another short extension

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I’m not sure what the public fear more, an potentially indefinite backstop or indefinite negotiations. Theresa May requested another short extension from the EU on Friday to get a Brexit agreement through Parliament, as she continued to engage in talks with the opposition Labour Party.

It seems there are differences though between what May deems to be an acceptable extension and what Tusk believes it to be, which is much longer, albeit flexible. This will likely be discussed at the emergency EU summit next Wednesday, with the default remaining that the UK leaves without a deal on 12th April, one week from today.

GBPUSD Daily Chart

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For now, that means more uncertainty for sterling traders. That said, barring a shock u-turn from the Prime Minister, her government and Parliament, no-deal remains unlikely.

That’s why we remain range-bound, no closer to exit day – in fact we’re probably further away, we just don’t know how far, which means prolonged economic uncertainty and sluggish growth but also the potential of a softer Brexit or remain.

This creates volatile but range-bound conditions for the pound, in this case between 1.30 and 1.33. We are near the bottom of that range now and have made a series of lower highs since the middle of last month, but I struggle to become bearish on the back of this. Only a breakout can achieve that. And we’re not exactly seeing momentum build heavily as we approach support.

GBPUSD 4-Hour Chart

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Craig Erlam

Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years’ experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.

Craig Erlam

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