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Oct 16 - 02:36 PM
GBP/USD - COMMENT-Brexit Deal Optimism Pushes GBP/USD To 5-Month High
First appeared on eFXplus on Oct 16 - 11:05 AM

Brief talk of a Brexit deal boosted GBP/USD to a five-month high by 1.2855, exposing risks to shorts even though it was later denied.
With the EU summit beginning tomorrow and the current Brexit deadline of Oct. 31 quickly approaching, GBP/USD shorts have been reducing positions put on after the original March deadline was delayed.
GBP/USD spec positioning moved from +922 contracts on April 16 2019 to -107,844 contracts on Aug 8 2019, with spot moving from 1.3048 to 1.2148 over the same period.
With the recent rise from 2019 lows near 1.2000 to current levels by 1.2800, specifically the rise from 1.2210 on Oct.
10 to current levels, Friday's release of GBP spec IMM position data will be scrutinized to see the degree of spec short-covering in anticipation of a Brexit deal.
Using IMM positioning as a gauge, the most recent time positioning was near flat, April 2019, GBP/USD traded just above 1.3100 so it stands to reason cable may return to those levels should shorts continue to exit if a deal is reached.
With that in mind a Brexit deal may boost GBP/USD to May 6 highs by 1.3190, but expect offers above as the UK growth outlook remains uncertain.


GBP Chart: Click here

Source:
Refinitiv IFR Research/Market Commentary

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