Finally something has knocked Brexit off its perch as the top driver of sterling.
The BoE's interest rate outlook has taken the spotlight as the recent dovish chorus by BoE members Carney, Tenreyro and Vlieghe nL1N29I03X weighs on GBP/USD and threatens to push it lower still.
This comes after PM Johnson calmed market Brexit fears, particularly about negotiators' ability to complete trade talks with the EU by the year-end 2020 deadline.
While GBP/USD has found a very slight bid in early NY, rising off its session low at 1.2961 to 1.2990 and near its NorAm high 1.2993, it's still down 0.63% on the day and there's little reason for new optimism among longs.
Though reduced Brexit tension has produced a shift from net short GBP to current spec long positioning, the lion's share of that adjustment came from spec shorts reducing positions.
GBP long positioning has risen from Sept.
lows by +21k to current levels +67k, while short positioning over the same time frame reduced from 130k to 51k. Rising probability of BoE cuts nL1N29I0D0 would put the pound at a disadvantage versus the dollar, with the Fed still offering a steady outlook, and jeopardize increased sterling longs.
Today's GBP/USD break below the 55-DMA and 100-WMA, into the daily cloud, puts Dec.
25's 1.2900 low in view and increases chances for a fall to the 200-DMA at 1.2691.