This Tuesday Will Be Zero Hour For the British Pound
By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets
This Tuesday, January 15, policymakers from the British Parliament are scheduled to vote on the Brexit agreement between the United Kingdom and the European Union (EU). At first, the voting had to take place on November 26th, 2018, but the British Prime Minister Theresa May canceled it doubting that her colleagues had all necessary information and were ready to make the right decision regardless of their emotions.
Right now, the rumor has it that Parliament will probably reject May’s offer, thus increasing both market and economic uncertainty while the Brexit is just 80 days away. According to the British policymakers, the current lawmaking schedule is too busy and has no extra time for them to discuss the Brexit agreement all over again in the available time. It will require a lot of time, which will put additional pressure on the British Pound, capital markets, and business strategies.
So, what scenarios does the UK have? The first one is optimistic, which implies that the policymakers will approve May’s strategy and allow it to continue. The Pound will grow against the USD a bit and investors will calm down. The second scenario is pessimistic, according to which there will be no positive decision on the agreement between the UK and the EU, at least in the current draft (May and her supporters had been beating their brains out on it for eight months). This, in its turn, may force another long discussion period and prevent the United Kingdom from making it on time, by March 29th. This scenario is rather negative for the Pound, it will surely make the British currency go down or even plunge.
In this light, all other catalysts aren’t important right now because all attention is currently focused on British Parliament.
Analyzing the H1 chart of GBPUSD, one can see that the current uptrend may be a correction of the previous long-term descending tendency. The correction has already reached the retracement of 23.6% and right now the price is testing the long-term resistance line and trying to break it. In general, the chart shows a pretty stable uptrend. As for further growth and possible targets, the first one worth paying attention to is the psychologically-crucial level at 1.3000. After reaching it, the pair may start a new pullback. To start this pullback, the price has to break the support line at 1.2770. The target of this pullback may be at 1.2580.
Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.