GBP/USD analysis: Parliament's rejection of Brexit deal will be "catastrophic and unforgivable"
|GBP/USD Current price: 1.2845
- Pound boosted by speculation Brexit could be canceled if the deal doesn't get through the Parliament.
- UK data disappointed, indicating shrinking business activity amid Brexit uncertainty.
The Sterling Pound run against the greenback to settle at its highest in eight weeks around 1.2840, despite looming Brexit's deal vote in the UK parliament, largely expected to be rejected by lawmakers. The pair surged during London trading hours after Conservative rebel Dominic Grieve urged UK PM Theresa May to delay Brexit if her deal is rejected, and while Downing Street later stated that there won't be an extension of Art. 50, the currency held on to gains. Foreign Minister Jeremy Hunt also said that Brexit may not happen if the deal can't pass the Parliament. UK data released Friday was quite discouraging, as Industrial and Manufacturing Production fell sharply in November, while the total trade balance came in at £-3.920B with a larger-than-expected deficit. The monthly GDP was of 0.2%, better than the previous 0.1%. During the weekend, PM May has warned lawmakers that failure to support her plan “would be a catastrophic and unforgivable breach of trust in our democracy.”
From a technical point of view, the daily chart offers a bullish stance, as the pair has held throughout the week above a bullish 20 DMA, now gaining upward traction around 1.2680, as technical indicators maintain their upward slopes in positive levels, although with limited strength. In the 4 hours chart, the upside is also favored, as despite losing upward momentum, technical indicators hold near their daily highs, while the pair develops above its 20 SMA and the 200 EMA. If the pair loses the 1.2800 level, however, the risk will turn to the downside, at least short-term.
Support levels: 1.2805 1.2760 1.2720
Resistance levels: 1.2865 1.2900 1.2945
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