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Will 1.2400 Stop Cable?
After Theresa May’s speech, today cable soared rising nearly four big figures off the lows of the day as it now stands within a few pips of the 1.2400 handle. Part of the run was fueled by the simple “sell the rumor, buy the news” dynamic, but part of the move was also driven by Ms. May’s promise to put the full Brexit to a Parliamentary vote.
However, upon further clarification, this was simply a promise to ratify a deal that will be negotiated well in the future rather than an admission that Parliament should vote on the trigger of Article 50. Still with UK Supreme court still to come chances are good that Ms. May may be forced to get Parliament approval before proceeding with any formal Brexit plans. If the ruling were to come in a few days it could well wipe out the last few shorts at these levels and push the pair into the 1.2500-1.2800 range. But if there is no fresh news for a few days, aside from the smattering of economic data, cable is likely to stall at these levels which represent the biggest resistance since its fall towards 1.2000 on the weekend open.
For now UK data continues to surprise to the upside and remains supportive of cable, but the Brexit woes dominate the trade in the pair and today’s speech offered little solace to pound bulls looking for a measured approach.