GBP/USD rises to a high of 1.2606 on the day
Cable is now testing the 38.2 retracement level @ 1.2604 of the decline yesterday as May sets out to Brussels later to meet with Juncker and Tusk. She is believed to seek legal assurances on the backstop so as to confirm that it won't be open-ended and that there will be a fixed date for it to end.
Coveney's comments here may have helped the pound with a bit of a move higher but in my view, they're still being purposefully vague on the matter. On the surface, it looks like May might be able to get something out of her meetings today but it's tough to envisage European leaders/officials just agreeing to it with a snap of the finger when this issue surely would have been known prior to the withdrawal agreement being drawn up last month.
This starting to feel like a game of political chicken where May is waiting for the last minute to corner the EU, as if she doesn't get the reassurance she needs, this deal is very much off the table. The question now is will the EU actually budge from their original position and officially confirm that the backstop will not be open-ended? Or will they let May return home without those assurances and face defeat when this is put to a vote?
Only time will tell on how this will play out but in the meantime, we're seeing a bit of a squeeze higher in the pound on the day. For cable, watch out for those retracement levels highlighted above. They will prove to be key resistance levels for sellers to lean on in the event that Brexit sentiment starts to turn ugly once again.