GBP/USD: Brexit headlines sending the pound to fresh highs in thin trade
- GBP/USD has rallied beyond the North American highs on the recent headlines bounding around which is essentially repeating the possibility for extending Article 50.
- GBP/USD is currently trading at 1.2783, reaching a high of 1.2790 from a pip below 1.2770 prior to the Brexit headline.
GBP/USD outperformed so far this week, recovering from last week's flash crash low to find territory back towards the 1.28 handle, some 300 pips higher. However, whether the bulls can maintain momentum as we approach the meaningful vote in The Commons next week is the key question, and volatility is highly likely. Moreover, depending on the outcome, we are bound to be inundated with conflicting headlines and Brexit noise that will dominate the FX boards between now and March when the UK could end up crashing out of the EU without a deal.
British officials are 'putting out feelers' for an Article 50 extension at discreet talks with EU counterparts
In thin trade, the pound has travelled quite a distance following the latest headline was from the UK Telegraph reporting that British officials are 'putting out feelers' for an Article 50 extension at discreet talks with EU counterparts. Some of the article read as follows:
"British and European officials are discussing the possibility of extending Article 50 amid fears a Brexit deal will not be completed by March 29, the Telegraph can reveal.
Three separate EU sources confirmed that UK officials had been "putting out feelers" and "testing the waters" on an Article 50 extension, even as the Government said it had no intention of asking to extend the negotiating period.The discreet diplomatic contacts, described by one source as officials "just doing their homework" emerged as a minister broke ranks for the first time to raise the possibility of extending the talks."
Valeria Bednarik, Chief Analyst at FXStreet explained the pair is holding on to a short-term positive tone according to the 4 hours chart, finding support in a flat 200 EMA, currently at 1.2720, while the 20 SMA turned barely up below it:
"The Momentum indicator in the mentioned chart barely eases from overbought readings while the RSI indicator keeps heading north, currently at around 65. A relevant resistance comes at 1.2814, the high set on the last trading day of 2018, with a spike higher expected on a break above it, but most likely, to be short-lived."