A report prepared by the UK government showing that the UK economy will be hit in any Brexit scenario leaked yesterday. Government ministers tried to play down the importance of the report, however media persisted on the issue. The issue seems to be confirmed as U.K. banks may have limited access to the EU single market after Brexit as reported by various media sources, hence confirming EU’s chief Brexit negotiator Barnier’s recent statement. On the inner political front, Theresa May, may be facing a small rebellion within the Tory party. 48 votes are required to trigger a leadership contest within the Tory party. These should not be good news about the GBP as political instability may increase and should the negative headlines continue, the GBP could be weaken.
In contrast to yesterday’s forecast for a bearish market, cable posted some gains, testing the 1.4175 resistance line. We see the case for cable to trade in a sideways manner. Despite yesterday’s rise, we see the case for the pair to enter a slightly bearish market as the greenback side of the pair may strengthen by today’s fundamentals and financial data. Should the bulls take the reins of the pair’s direction we could see it breaking the 1.4175 resistance level and test the 1.4325 resistance barrier. Should the bears have the upper hand, we could see the pair breaking the 1.4040 support line and hover slightly below it.