Why sterling remains resilient

The key difference in sterling’s reaction compared to the first indicative round is that the pound hasn’t fallen as far; at least not yet. Ignoring the immediate late-night drop on 27^th March and counting just the full session last Thursday, sterling shed 183 pips against the dollar. A day later, the rate slammed through psychological $1.30 after MPs rejected MV2.5, before bouncing at $1.2976. The pound slumped 125 pips post Monday voting, bouncing well above $1.30.

As well as slim margins of defeat (customs union motion: three votes; ‘public vote’: 12) bulls see other hopeful signs

• Theresa May was hosting cabinet meetings on Tuesday amid reports that she would choose ‘no deal’ over Article 50 revocation. Since choices aren’t that binary (yet), her stated disapproval of the former suggests she’s still avoiding it
• There’s no question the Prime Minister will skip a 10th April emergency summit
•  A cross-party group is formulating a motion to force a delayed EU departure, though details are vague
• Clerks to the House of Commons Speaker have hinted that he’s still against a third vote on the unadulterated Brexit deal

So, another sterling impasse reflects the political impasse. Yet medium-term options continue to show speculators are unfussed and hedgers relatively relaxed. This looks complacent. But the alternative is costly protection that’s difficult to target and meagre volatility to trade. Keys for shattering the (highly conditional) calm to the downside could be any break of sterling’s 200-day average, latterly at $$1.2968, or the collapse of well corroborated support around $1.2960-80. Absent these, sterling’s general uptrend sets an initial course back to $1.3119-1.31498 intermediate resistance, before $1.33 range tops.