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  • Ireland’s Varadkar says they are not close  to a deal than they were in March.
  • UK PM May and Brexit Secretary Raab voice their opposition against a second referendum.
  • US Dollar Index continues to move sideways near mid-94s.

The GBP/USD pair failed to take advantage of the upbeat inflation report from the UK on Wednesday as a barrage of comments on the latest developments surrounding Brexit negotiations became the primary driver of the pound sterling’s price action. As of writing, the pair was trading at 1.3145, where it was virtually unchanged on the day.

The data released by the ONS showed that both the CPI and the core-CPI rose more than expected in August to provide a short-term boost to the pounds. However, while speaking to Sky News, the UK Treasury Minister, Mel Stride, said that a second referendum would be possible if the Prime Minister’s Chequers proposals were rejected in the Parliament vote and weighed on the GBP.

Later in the day, officials delivered short remarks as they arrived at the Salzburg summit. Irish Prime Minister Varadkar told reporters that they were not close to reaching a Brexit deal than they were back in March and the European Union Commission President, Jean-Claude Juncker, said that the EU and the UK  were still far away from a Brexit agreement. On the other hand, British Prime Minister Theresa May reiterated that the government would never accept a second referendum and the Chequers plan was the “only credible proposal to ensure frictionless trade, no hard Irish border.”

Additionally,  British Brexit Secretary Dominic Raab just recently spoke live on LBC radio and noted that it was unlikely for the Parliament to force a second referendum if they failed to reach a deal. “Despite this morning’s sharp drop in the British Pound on news of the continuing Brexit disagreement over the Irish border, the pound remains on the ascendant against the dollar and the euro,” FXStreet Senior Analyst Joseph Trevisani pointed out today.

The only data featured in the UK economic docket on Thursday will be retail sales, which is expected to 0.2% on a monthly basis in August after rising 0.9% in July. Nevertheless, Brexit headlines are likely to continue to dominate the pair in the upcoming days.

Technical outlook via FXStreet Chief Analyst Valeria Bednarik

The pair plunged to 1.3096 but managed to regain the 1.3100 level, and while failed to settle above the key 1.3170 level, the 50% retracement of the 2016/18 rally, it ´s once again holding nearby. The latest Juncker and Varadkar’s comments leaned the scale to the downside, although in the 4 hours chart, the price is holding above a still bullish 20 SMA after briefly piercing it earlier in the day. Technical indicators in the mentioned chart remain within positive levels, but gaining downward traction, favouring a steeper decline in the case of a downward extension below the daily low.  

Support levels: 1.3095 1.3050 1.3010

Resistance levels: 1.3170 1.3210 1.3240