GBP/USD has been drawn to the 1.2300 level for a week, as the end-game of the Brexit saga approaches.
Both the UK and EU are reluctant to be seen as responsible for the failure to strike a Brexit deal, which means that their language to the press may not truly reflect the state of play in negotiations. PM Johnson presented a proposal for an alternative to the Irish backstop in former PM May's deal nL5N26M6LX, which the EU's Brexit negotiator Barnier greeted with a guarded 'progress, but a lot more work needed' nL9N25P02C.
Johnson maintains that he will not resign and the UK will leave the EU on Oct.
31, with or without a deal, despite a no-deal exit being illegal.
Economically both sides are desperate for a viable compromise, though Boris disguises this well.
Without a government majority, parliament should ensure there will be many twists and turns, before a potential election in Q4.
With Brexit on a knife edge, GBP/USD daily charts are neutral; 1.2197, 61.8% of the September bounce and near this week's base, is major support, while a close above the 1.2379 21 DMA would be positive.
Expect the last month's 1.2100-1.2600 choppy broad consolidation to extend, until the smoke clears.
gbp2 oct 3 Click here