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So the EU Summit came and went without much clarity on the Brexit deal? What’s next for the pound and can it still recover in the days ahead?

BOE Governor Carney’s speech (Oct. 23, 3:20 pm GMT)

Guv’nah Carney is scheduled to give a speech about artificial intelligence and the world economy at the Annual Machine Learning and the Market for Intelligence Conference in Toronto.

While all eyes and ears are still on Brexit, Carney might still offer some remarks on economic outlook and monetary policy, enough to put the spotlight back on U.K. fundamentals. Keep in mind, however, that the latest batch of figures have disappointed, so he might not be too cheery either.

More on Brexit

No. 10 is due for a speech in the House of Commons to start this week, likely telling lawmakers that 95% of the Brexit deal is settled. However, not many are expecting her remarks to rouse optimism or even clarity as it would likely be met with some opposition as usual.

Much of May’s testimony would likely focus on the positive, such as the agreements on settling the divorce bill at 39 billion GBP and having the transition period on until 2020. However, stay on the lookout for fresh jitters on a leadership challenge as many are unhappy about the government’s inability to push for their demands concerning the Irish border backstop.

Conservative lawmakers have a huddle scheduled on Wednesday, possibly demanding party chair Brandon Lewis to call for a vote of confidence in May’s leadership.

Last Week’s Price Review

The pound is poised to close out the week in very last place (as of 2 pm GMT), thanks to lack of Brexit progress during the E.U. Summit, as well as the U.K.’s disappointing CPI report.

Overlay of GBP Pairs: 1-Hour Forex Chart
Overlay of GBP Pairs: 1-Hour Forex Chart

GBP pairs started the week by gapping lower across the board, thanks to rumors over the weekend that Brexit talks have been paused. There was little follow-through selling, however, so GBP bulls tried their best to fill the gaps on most pairs.

The pound then began trading sideways for some time but eventually encountered buyers during Tuesday’s London session, thanks to short-covering ahead of the E.U. Summit and the promising picture on wage growth, courtesy of the U.K.’s latest jobs report.

Bears later came out of the woods during Tuesday’s U.S. session, however, due to European Council President Tusk’s harsh comment that there are “no grounds for optimism” on Brexit talks leading up to the EU Summit.

However, the pound would later find support during the later part of the U.S. session thanks to rumors that the E.U. is ready to offer an extension to the Brexit transition period.

The pound then traded sideways after that before encountering fresh sellers during Wednesday’s London session due to preemptive selling ahead of and follow-through selling in the wake of the U.K.’s disappointing CPI report.

Buying pressure returned ahead of the E.U. Summit, though, likely because of short-covering.

Sadly for GBP bulls, it soon became apparent that little progress was made on Brexit during the E.U. Summit, a November Brexit Summit is still in limbo, and there were even rumblings that Germany and France were gearing up for a possible “no deal” scenario.

However, the apparent trigger for the pound’s slide is this disappointing comment from E.U. Chief Brexit Negotiator Michel Barnier:

“We are not there yet … We need time, we need much more time. We will continue the work in the next weeks calmly and patiently.”

It was downhill for the pound after that. Well, the pound did catch a soft bid at the start of Thursday’s London session and even shrugged off the U.K.’s disappointing retail sales report, thanks to clarification from Theresa May’s spokeswoman than an extension of the transition period is “an idea at this stage, and there are others,” while also saying that Theresa May is looking at other ways to push Brexit talks forward.

However, sellers would launch a fresh offensive later when Gordon Rayner, political editor of The Daily Telegraph, had these series of tweets:

Tom Newton Dunn, political editor of The Sun, also tweeted the following, which may have also fueled political uncertainty and weakened the pound further: