Cable pulls back from new five-month high (1.2798) in early European session trading on Wednesday, a traders await fresh news from marathon UK/EU talks.
Positive signal that the deal is close to be reached inflated sterling on Tuesday, but rally stalled at 1.2800 barrier on no confirmation that the deal is in hand.
The latest news expressed some pessimism about the deal that resulted in fresh bearish acceleration, keeping very high volatility.
UK government announced that today’s round of talks started and markets will be carefully watching the progress.
Near-term risk turned to the downside as fresh easing broke below 200DMA (1.2711), with overbought daily studies adding to negative signals, however, Brexit news are going to be key driver today.
Positive news on signals that the deal is reached would boost pound for possible extension towards psychological 1.30 barrier.
On the other side, stall of negotiations would deflate sterling and risk dip to minimum 1.2500/1.2400 zone in immediate reaction.
UK inflation data (Sep CPI y/y 1.8% f/c vs 1.7% prev) are another important event today and could impact near-term action, on potential surprise.
Res: 1.2711, 1.2725, 1.2746, 1.2788
Sup: 1.2672, 1.2656, 1.2635, 1.2597
