GBP/USD — Decoupling From DXY Ahead Of Brexit Vote

Friday’s bullish outside day has shifted the focus towards further upside. The breakout occurs despite the weakness present in the EUR/USD in the last 2 days, clearly implying that this GBP-centric move is predicated on the hopes that a positive Brexit outcome may emerge this week in the form of an extension of the article 50. On the lower windows, you can observe the decoupling of the GBP/USD with the EUR/USD in a magenta line. The bullish breakout of the sticky resistance at 1.28 (POC November) alongside the rising UK vs US bond yield spread does reinforce the view that short-term bullish risk exists, even if one must be mindful that vol is set to pick up substantially from Jan 15 when the UK parliament is set to move forward with the Brexit meaningful vote. Any setbacks now face 3 critical macro areas at 1.28–2785, followed by 1.2712 ahead of the Dec POC at 1.2650–55.