GBP/USD pulls back from multi-month top amid mixed Brexit news

• GBP/USD retraces from five-month high as the absence of EU communiqué questions the latest Brexit optimism.
• DUP, Tory Eurosceptics and Irish members seem to dislike the UK PM’s Brexit deal.
• EU’s announcement, UK PM’s mass meeting, and the UK CPI will be followed for fresh impulse.

With Brexit tensions on paramount, GBP/USD awaits confirmation of recent rally while taking a step back to 1.2760 amid the initial Asian trading session on Wednesday.

Not only Tory hardliners that are against the United Kingdom’s (UK) Prime Minister (PM) Boris Johnson’s Brexit deal, as per the Sun, but policymakers at the Democratic Unionist Party (DUP) and Northern Ireland are also having doubts over the Tory leader’s proposal.

Read: Boris Johnson’s fledgling Brexit deal causes a major split among Tory hardliners

While PM Johnson is likely using cash motives to gain the support of the DUP, as per the Financial Times, this isn’t going to solve the major issue of getting the deal pass through the Commons where Tories aren’t in the majority, not to mention about the backbenchers.

As a result, the Pound Bulls are catching a breath while the talks are on in Brussels to announce the summit before the 02:00 PM deadline. On the other hand, the UK PM has also scheduled for the mass meeting of the 1922 committee of Conservative backbenchers at 7.30 pm London time.

Other than Brexit headlines, that will be the key driver, the UK Consumer Price Index (CPI) data for September will also entertain momentum traders. “We look for September CPI to continue to sit above the BoE’s forecasts from the August IR, coming in at 1.8% y/y (mkt 1.8%, BoE 1.7%). Beneath the headline, we look for core CPI to rebound to 1.7% y/y (mkt 1.7%), with risks skewed to the upside, and with headline CPI seeing a growing contribution from food prices after the depreciation of GBP over the summer, says TD Securities.

Technical Analysis

A sustained break of April low nearing 1.2865 will give green signal to the buyers targeting 1.2910 and 1.3000 psychological magnet, until then fears of pair’s decline below 200-day Simple Moving Average (SMA) level of 1.2715 now, followed by a drop to September high near 1.2585, can’t be denied.