GBP/USD to test 1.28 without commitment to enter the final phase of Brexit talks – OCBC

The pound saw a choppy, headline-driven session on Thursday. The cable swung between 1.2820 and 1.2980 depending on the headlines that flowed through. Terence Wu, FX Strategist at OCBC Bank, braces for more action this Friday, with the EU side expected to announce whether there is sufficient common ground for them to enter the final phase of negotiations. 

Key quotes

“Two takeaways – first, the optimism at the start of the week surrounding the negotiations are likely misplaced; second, expect the volatility to continue, with the cable being the barometer for the Brexit sentiment.”

“Expect the GBP/USD  pair to be mainly headline-driven as markets await the official outcome of the Brexit talks today. Without a commitment to progress to the next stage of talks, the first support at 1.2800 may come into play.”

“If 1.2800 is breached, the next support will be at 1.2700. Expect 1.3000 to cap.”