GBP/USD short positions falling, although Brexit work still to be done

• GBP shorts have been falling, USD net longs have also slipped.
• Brexit negotiations continued over the weekend ahead of EU summit, but lots to be done.  

Net short GBP positions dropped back for a fourth consecutive week, although long GBP/USD  is losing its appeal today  having come off the highs for the day up at 1.2649 and scoring a low of 1.2515 as Brexit risk pressures the Pound.  

There had been a lift in optimism regarding the prospects of a Brexit deal between the UK and the EU, particularly in the last week. Negotiations continued over the weekend, however, Boris Johnson has a very tough balancing act in trying to keep the DUP onside but also come up with something that works for the EU and there is a lot of work to do.

In recent trade, we are hearing echos of the weekend news that it is unlikely that a deal can be achieved  before the EU Council meeting on Thursday. However, that is not to say that European leaders could not gather for a second occasion  or extend the Council meeting into the  following week should need be.    

We are heading into the Brexit eleventh-hour

“Either way domestic developments will kick off when parliament sits on Saturday,” analysts at TD Securities explained. “If there’s a deal then parliament will vote on it, though it’s highly uncertain whether it would be able to pass, with some Tory rebels reportedly pushing for a confirmatory referendum first. And if there is no agreement then the Benn Act comes into play, which forces PM Johnson to request an extension from the EU, something that he may try to fight.”

While GBP shorts have been falling, USD net longs have also slipped for the first time since the middle of August.    “Recent US economic data have highlighted the debate regarding the extent of the downturn faced by the US in the months ahead. Focus is on the October 30 FOMC meeting and the prospects of a Fed rate cut,” analysts at Rabobank explained.  

GBP/USD levels