Following up on the previous post on the cable where I recommended a short with a final target of 1.2700, I have closed my position early, just before the pair retraced up. The week ended with the cable at 1.3190, bouncing off the 61.8 retracement level of the dip.
Let’s take a look at fundamentals. From UK’s perspective, the EU has given Britain a 2-week deadline to clarify key commitments that it is willing to honour. While both parties claimed that talks were to accelerate after October, there has been no significant development till date. The current situation has certainly left most market participants in limbo, undecided on the consequences of Brexit. As mentioned previously, with EU being Britain’s largest trading partner (accounting for 43%), it is not difficult to comprehend the complications of Brexit. As a matter of fact, it is not a matter of good or bad, but rather how bad would it be?
US wise, equities ended lower amid concerns of Republican’s tax plan and possible delay of cut in company’s taxes. The DXY has also ended the week lower. Currently, while I hold a neutral stance towards USD, I remain fundamentally pessimistic on the cable. The existing price action proved itself to be a good entry, and hopefully a profitable trade.