Sterling In Limbo, Waiting For EU Decision On Brexit Extension

The pound was once again in limbo during the Asian session as investors await the news of the Brexit extension. The favourite period appears to be three months, which would take it to Jan. 31, while France were allegedly pushing for an earlier exit data around mid-November. All should be revealed later today, though there is some speculation in the UK press that a final decision may not be forthcoming.

In the meantime the pound suffered yesterday after PM Johnson tested the waters for a December snap election. He said he will give MPs more time to debate his Brexit deal if they agree to a December 12 election. We can probably expect a motion to be tabled on Monday calling for a general election, which would require two-thirds of MPs to vote for it.

GBP/USD slid to the lowest level in a week yesterday but has only declined 0.07% so far today. The pair failed to close below the 23.6% Fibonacci retracement level of the October 8-21 rally at 1.2820, while the 200-day moving average sits at 1.2715 today.

GBP/USD Daily Chart

GBP/USD Daily Chart

Double sentiment

It’s a relatively quiet end to the week on the data front, with two German sentiment indicators on the agenda. The Gfk consumer confidence survey for November is seen slipping to 9.8 from 9.9 this month while the October IFO business expectations index is seen slightly better at 91.0 from 90.8 last month.

The only US data on tap is the Michigan consumer sentiment index for October, which is seen unchanged at 96.

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