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.