Pound edges to daily highs as UK PM unveils plan B

Summary:

• GBPUSD back above $1.29 after UK PM May addresses parliament

• May outlines 6 key issues

• Overall little has really changed but the pound is making steady gains

This afternoon’s update on the Brexit process from the UK PM Theresa May has provided no real surprises, and little by the of any real new points, but has provided some small upside in the pound nonetheless.

The GBPUSD has reacted positively to May’s speech, rising around 60 pips off the lows despite nothing really being said that was supportive or that hasn’t been said already. Source:xStation

The gains are perhaps a little surprising given that May once more refused to take no deal off the table (the outcome that would be most negative for the GBP), but it seems on the whole that market still feels this outcome is the least likely going forward.

Key quotes from PM May

• EU are very unlikely to extend Article 50 without a plan for a deal

• Revoking Article 50 would go against referendum results

• Party has duty to implement Brexit referendum result

• UK must fully respect Belfast agreement

• Will discuss backstop this week with DUP

• Parliament must have say in future ties with EU   

On the whole this reiterates that May hasn’t really changed her stance and she will look to continue to frame the vote as her deal vs a no-deal. It is a strategy that seems unlikely to work ultimately, but to get EU approval for an extension of Article 50 she will likely have to propose a marked shift in her stance rather than just delaying for the sake of delaying.  

Longer term the market remains between the 1.2830 and 1.3000 levels of support and resistance. A break outside of this narrow range could well open up the next sustained move. Source: xStation