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Analysts at Scotiabank explained that sterling retains a firmer undertone overall but we remain concerned that gains may be based on rather fragile foundations.  

Key quotes:

“Market sentiment has recently been cheered by suggestions that the UK/EU can reach a deal in the next few weeks but there is precious little hard evidence that any of the major differences have been addressed at this point.”

“PM May reiterated that there was only one alternative to her Chequers plan and that was a “no deal” divorce. We think the GBP may be able to extend gains in the short run but reality may bite back as the clock runs down for an agreement later this year.”

“GBP/USD short-term technicals: neutral/bullish – Sterling has risen steadily through Sep so far and broader patterns (gains above the 1.2950/1.3050 range earlier this month) suggest scope for the rally to extend towards 1.33 (38.2% Fib retracement of the 1.47/1.26 drop).”

“Intraday patterns are looking a little tired and loss of support around 1.3115 may trigger modest corrective losses to the 1.3050/75 area. Resistance intraday is 1.3175.”

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