GBP/USD — Enters Resistance Amid Broad-Based USD Weakness

Fundamentally, if you can’t foresee the Brexit situation getting better before it gets worse, the Sterling is currently exchanging hands at an area of high interest. The area it trades at, circa 1.28, constitutes the POC through October and what I expect to be a major wall of offers. The area highlighted in red should be very solid in terms of liquidity for a potential sell-side campaign ahead of next week’s second Brexit meaningful vote. Also, bear in mind that the Put premiums remain elevated vs Calls, so there is still a genuine perception that the Sterling is trading at too rich levels based on the risks ahead. One of the possible scenarios to play out, as recently reported, is that the EU and the UK find a way to extend the article 50 in order to keep kicking the can down the road and going back to the drawing table for the necessary concessions. The pair is still subject to major erratic vol.