GBP/USD – Edges lower as May requests more time

PM hopeful of another short extension

I’m not sure what the public fear more, an potentially indefinite backstop or indefinite negotiations. Theresa May requested another short extension from the EU on Friday to get a Brexit agreement through Parliament, as she continued to engage in talks with the opposition Labour Party.

It seems there are differences though between what May deems to be an acceptable extension and what Tusk believes it to be, which is much longer, albeit flexible. This will likely be discussed at the emergency EU summit next Wednesday, with the default remaining that the UK leaves without a deal on 12th April, one week from today.

GBPUSD Daily Chart

OANDA fxTrade Advanced Charting Platform

For now, that means more uncertainty for sterling traders. That said, barring a shock u-turn from the Prime Minister, her government and Parliament, no-deal remains unlikely.

That’s why we remain range-bound, no closer to exit day – in fact we’re probably further away, we just don’t know how far, which means prolonged economic uncertainty and sluggish growth but also the potential of a softer Brexit or remain.

This creates volatile but range-bound conditions for the pound, in this case between 1.30 and 1.33. We are near the bottom of that range now and have made a series of lower highs since the middle of last month, but I struggle to become bearish on the back of this. Only a breakout can achieve that. And we’re not exactly seeing momentum build heavily as we approach support.

GBPUSD 4-Hour Chart

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

Latest posts by Craig Erlam (see all)