GBP/USD Forecast: Investors look past May’s Brexit vote defeat, Carney's testimony/UK CPI eyed
|The GBP/USD pair had good two-way moves on Tuesday and the intraday volatility was solely led by the incoming Brexit headlines. Having failed to sustain/build on its momentum beyond 100-day SMA barrier, the pair witnessed a sharp turnaround and tumbled nearly 250-pips to over one-week lows just ahead of the crucial vote on the UK PM Theresa May's Brexit deal. The House of Commons overwhelmingly rejected May's plan but the defeat by a 230-vote margin (432-202 against the deal) was more severe than anticipated.
Meanwhile, the opposition Labor Party leader Jeremy Corbyn tabled a no- confidence vote on PM May, which will take place Wednesday and further added to the recent uncertainties. Ironically the British pound strengthened across the board amid hopes for a possible second referendum, extension of Article 50 or no Brexit at all. The pair recovered a major part of its early slump to an intraday low level of 1.2668 and now seems to have stabilized above mid-1.2800s.
With the next step in the UK’s exit from the EU still highly uncertain, odds of a soft Brexit with a deal, a hard Brexit with no deal, a general election or a second referendum are still on the table and might continue to infuse volatility across GBP pairs. In the meantime, market participants will be looking towards the BoE Governor Mark Carney's testimony before the Treasury Select Committee and the latest UK consumer inflation figures for some short-term momentum play.
From a technical perspective, the pair needs to find acceptance above 100-day SMA, currently near the 1.2900 handle, before traders start positioning for any further near-term appreciating move towards challenging a near four-month-old descending trend-line resistance, around the key 1.30 psychological mark. On the flip side, the 1.2800 handle now seems to act as an immediate support, which if broken might accelerate the fall further towards the 1.2740 horizontal zone en-route the 1.2700 round figure mark.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.