What was initially seen as the make or break summit has now been labelled nothing more than a damp squib. Expecting some further market volatility after last week’s equity sell-off was maybe asking for a little too much. Brexit takes centre stage at the 2-day summit which began today but both parties have dampened hopes of ratifying a deal with the likelihood that talks will continue in hope of reaching an agreement in the coming months.

The Irish border still remains the key focus, with the EU refusing to discuss any trade deals unless a backstop is in place to deal with the Ireland and Northern Ireland border. Any agreement that keeps Northern Ireland within an economic zone that differs from the mainline has been a sensitive subject for the UK, mainly because the Democratic Ulster Party is propping up a minority government and they will veto any such deal. Recent talks in London broke away without anything new to present at the summit, even the offer a transition extension has not eased tensions as prime minister May is under pressure to enforce Brexit. Recent rhetoric points to governments stepping up preparations for a no deal Brexit. One thing is for sure is that talks behind the scenes will continue with the urgency to reach an amicable agreement becoming more urgent as the official Brexit date in March next year moves ever closer.

An ascending triangle formation is developing which suggests market players are buying the dips but meeting a solid resistance between 1.3213/1.3300, this resistance is sitting just below an untested 38.2% fib which may be its last line of defence. The rising trend support shows a conclusion to the pattern is not far off with a break below 1.3031 suggesting the sellers are getting the better.

GBPUSD, DAILY CHART – Ascending Triangle Pattern Developing

GBPUSD chart_ascending triangle pattern