GBP/USD analysis: Pound collapses ahead of vote, bounces sharply afterwards
|GBP/USD Current price: 1.2857
- UK Parliament voted against PM May's deal as expected.
- Non-confidence vote on PM May scheduled for Wednesday, 19 GMT.
The GBP/USD pair hit 1.2915 at the beginning of the day, collapsing mid-US afternoon to 1.2749, its lowest for this week, as the UK Parliamentary debate on May's Brexit deal begun. The pair fell further and broke below the 1.2700 as PM May spoke, repeating that is either her way or no way out of the EU with a deal. There were four amendments proposed but three of them were withdrawn, with only the one proposed by John Baron submitted to vote. That amendment basically said that the UK would have the right to terminate the backstop without the say-so of the EU. The amendment to rewrite the backstop was rejected by 600 vs. 24 votes. MPs then voted May's deal, rejecting it by 432 votes against vs. 202 in favor. The Pound soared with the news, regaining the 1.2800 level and trimming most of its intraday losses. Labour opposition proposed a no-confidence vote on PM May that will take place Wednesday at 19:00 GMT. If she losses it, a general election will follow. Chances of a hard-Brexit, nor Brexit at all, or a delay of Art. 50 are now back on tap.
The GBP/USD pair now trades in the 1.2860 region, and the 4 hours chart shows that, despite the intraday slump, chances of a bearish move are limited, as technical indicators are currently bouncing from around their midlines, while the pair is settling above its 20 SMA and 200 EMA. Wide ranges and high volatility is not over, as the fact is that, after all the noise, uncertainty remains the same. The pair could keep rallying should the recovery extend beyond 1.2900, now the immediate resistance.
Support levels: 1.2830 1.2805 1.2765
Resistance levels: 1.2900 1.2930 1.2960
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