Market Overview

Sterling Little Changed As UK Based Banks Won't Claim Single Market Access After Brexit

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  • The Brexit “white paper” drops the demand for UK-based banks to access the EU single market after Brexit.
  • GBP/USD is trading within a tight range of 40 pips around 1.3200 level as the long-awaited Brexit whitepaper shook the UK government.

Sterling is pressed to 1.3200 level after the long-awaited Brexit white paper saw the UK Prime Minister Theresa May dropped the claim of the EU single market access for the UK-based banks while claiming “a principled and practical Brexit”, arguing that its proposals address questions raised by the EU in the intervening months.

The GBP/USD rose to a 2-week high of 1.3363 on Monday as the UK government sought a quick fix to Brexit minister David Davis resignation that saw markets appeased by expecting smoother Brexit transition. The foreign minister Boris Johnson’s resignation later on Monday cut the prospects back.

The number of Sterling short contracts increased last week by more than 7K to 28.78K according to CFTC report from last week. 

In terms of fundamental, neither the UK government's Brexit white paper, not US inflation affected the market strongly as numbers and the report met the market expectations.

Technically near-term resistance is around 1.3300 with the break above likely to take the pair towards a 50-day moving average of 1.3355. The GBP/USD should close well above 1.3300 on daily basis for bullish continuation.  On the downside, the short-term support is around 1.3190 and any break below seen targeting 1.3150-1.3100-1.3045.

GBP/USD 1-hour chart

Posted-In: FXStreetNews Eurozone Forex Markets

 

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