GBP/USD's shallow rise after PM Johnson's speech to conservatives UK Conservatives nL5N26N3GV indicates hints that cable bulls are losing faith in the possibility of a new Brexit deal with the EU nL2N26N0FM.
Johnson is expected to deliver new proposals on Brexit and the Irish backstop shortly but provided no clear message in his speech.
Bullish GBP/USD sentiment flourished recently, but it's unlikely to reach the 1.35-1.40 range that some had targeted earlier in the year when soft-Brexit expectations had increased, given the gap between the UK government, the EU and UK lawmakers.
GBP/USD is once again trolling the daily cloud bottom, at 1.2228, eying a drop below and possible return to recent trend lows at 1.1959.
Beyond the Oct. 31 deadline, expectations of new elections add to growing bearish GBP/USD sentiment, since they could open the way, as Deutsche posits nL5N26N3SC, to a no-deal Brexit by year-end 2019 or a Labour coalition, more delays or a second referendum, all seen as GBP-negative.
Bulls need a rise above cloud top resistance at 1.2399, but don't regain momentum until rallying above 1.2670, the 50% Fib of 1.3380-1.1959, the 2019 range.
Under current conditions it appears Oct. 2016's flash low at 1.1491 will be targeted nL2N26N0D1.
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