- UK media report that the UK and European officials are discussing the possibility of extending Article 50, the Daily Telegraph reported on Monday evening.
- The UK Brexit Secretary Barclay said the government is not looking to extend Brexit leave date.
- Re-pricing of the outlook for the US rates is weighing on the US Dollar.
The GBP/USD is trading little changed at around 1.2770 on Tuesday after the UK government officials denied the media speculation of the UK government seeking the ways how to prolong the Article 50 extension in order to re-arrange the Brexit deal and possible extend the term of the UK leaving the European Union beyond currently scheduled March 29. At the same time, the US Dollar is under pressure as markets re-price the rate outlook path from two rate hikes in the US in 2019 to one, or possibly none. The FOMC meeting minutes scheduled for Wednesday are set to provide fresh clues.
The report from the Daily Telegraph indicated on Monday evening that the UK government is in talks behind the scene about possible Article 50 extension to buy more time to either re-arrange the Brexit deal or find another solution to what seems like an ultimate No from the members of parliament to the current Brexit deal negotiated by Theresa May.
The UK Brexit Secretary went public saying there is no such move from the government on Tuesday with GBP/USD still waiting form more Brexit headlines to come out of the UK parliament that started the Brexit deal debate and it is expected to resume in a meaningful vote next week.
Technically, the GBP/USD is trading in a downward sloping trend on a daily chart while capped by a 50-day moving average at 1.2770. The technical oscillators including Momentum and the Slow Stochastics are pointing higher with the Slow Stochastics making a bullish crossover within the neutral territory. The Relative Strength index though still remains flat after turning flat-to-higher as Sterling retreated from last week’s 21-month low at 1.2438. The GBP/USD is expected to remain flat with Brexit headlines likely to weigh on the currency pair while markets will seek clues for the US monetary policy outlook in Wednesday’s FOMC meeting minutes. Even with GBP/USD resuming sideways trend and a short-term recovery towards 1.2790 or above, this is still not enough to reverse the trend. With Brexit deal uncertainty weighing on Sterling, a fundamental pressure is still in place to see GBP/USD falling further towards 1.2500-1.2440 level.
GBP/USD daily chart
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