TAKEAWAY ONE - The Euro saw some decent demand in Monday trade and this helped to prop the market up across the board against the Buck. While the price action is certainly welcome from my perspective, given the positioning in the portfolio right now, we still aren't seeing anything that would have me getting excited just yet. As I've highlighted and continue to highlight in the technical updates, the Euro has been trading sideways for many weeks now and until we see the major pair break back above 1.1850 or below 1.1510, there really isn't anything we can talk about as far as meaningful developments go. But if there was something interesting to be taken from the Monday price action, it's that the market had every excuse to be wanting to buy the Buck after Eurozone sentiment readings were soft, German CPI was cooler and US pending home sales were robust. The reason I bring this up is to show there is reason for legitimate Dollar selling even if economic data says otherwise, something that is very much supportive of my bias.
TAKEAWAY TWO - As far as how all of this impacts the current GBPUSD long position, we don't necessarily need to see Brexit breakthroughs for the trade to get going. It could get going on renewed US Dollar weakness. While a nice chunk of Pound's decline since April has come from the Brexit side of things, the Dollar side is also a major factor here and I would suggest that it is possible to see the Pound bid up on a renewed selling of the US Dollar, even if Brexit uncertainty hangs in the balance. This was the way things were heading into 2018 and for a good portion of 2018, with the Dollar selling a major source of the Pound's strength. And so, while BOE risk may still weigh on the Pound over the medium term, any sentiment shift towards the US Dollar, could easily be enough to fuel the Pound back up in the weeks ahead. Of course, we also get a BOE decision later this week, and this could be another source of GBP strength, if the BOE accompanies its expected rate hike, with a positive message. I am keeping an eye on 1.3215 and will be encouraged should we see a daily close back above this level.