Last night's decision by the EU to grant a Brexit extensionnL8N21T1RX has met with a tepid response.
GBP/USD has fallen from overnight highs by 1.3108 to current levels by 1.3080, and is likely to remain biased to the downside as UK political negotiations in parliament continue.
Technically GBP/USD looks set to remain in a trend channel from 1.3136-1.2866, bounded loosely by the 30-DMA and daily cloud base, with interim support by the 200-DMA at 1.2975.
With the new Brexit deadline set for October 30, GBP/USD traders should shift focus to economic fundamentals, which, owing to the broad global slowdown, is unlikely to support a rise to new 2019 highs above March 13's high by 1.3380.
Recent UK data has been upbeat on front-loaded purchases in preparation for Brexit, first on March 29 and then on April 12.
With the current extension, there is less urgency to warehouse goods in the near-term.
Despite the reduced tension in the market, evidenced by a drastic reduction in GBP/USD volatility nL1N21T0LG, parliament has resumed debate on Brexit and judging by the headlines Tory nS8N211003 and Labour nS8N20502R lawmakers may need the full six months to come to a agreement.
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