GBP/USD Forecast: Sterling set to break on the upside after EU sealed Brexit deal
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- The GBP/USD is expected to open the final week of November on the upside after the Brexit summit sealed the Brexit deal on Sunday.
- The UK Prime Minister May now needs the UK parliament to vote for the Brexit deal to move forward.
- The GBP/USD is expected to open with the gap on the upside after closing last week at 1.2815, but it needs to break above 1.3000 to escape from the downward sloping trend.
The GBP/USD was boosted to trade as high as 1.2928 on news of the UK and the EU reached over the last week and it is expected to be boosted again after the Sunday Brexit summit approved the deal supporting the UK Prime Minister Theresa May in her effort to have the deal passed in the UK parliament.
“Those who think that, by rejecting the deal, they would get a better deal, will be disappointed,” European Commission President Jean-Claude Juncker said after the 27 other EU leaders formally endorsed a treaty setting terms for British withdrawal in March and an outline of a future trade pact between the UK and the European Union.
Now the key House of Commons vote is expected to approve the Brexit agreement in a meaningful vote. This is a crucial part for Theresa May government as there are many dissenters opposing the Brexit deal in her own Conservative party already and to pass the Brexit agreement in the UK parliament, the support of opposition will be required. The meaningful vote is expected to pass in December.
If the House of Commons approves the Brexit deal in a meaningful vote, the government will prepare a new piece of legislation that will be passed into law Brexit’s biggest issues, including the agreement on citizens’ rights, the financial settlement and the details of the transition. As details are expected to be discussed politically hot debate is expected.
The ratification of the Brexit agreement by individual EU member states parliaments will follow before the UK formally ends its membership on March 29, 2019.
The GBP/USD was moving in a downward sloping trend, but it is expected to open with the gap on the upside after the weekend Brexit deal approval. The Momentum and the Relative Strength Index both remain in the neutral zone and the Slow Stochastics made a bullish crossover in the oversold territory. Together with the golden cross of a 50-day moving average crossing over a 100-day moving average to the upside, the indicators are pointing rather to the upside for GBP/USD. The GBP/USD needs to break above 1.3000 to signal a trend reversal targeting 1.3060 before moving to 1.3380 and 1.3460 important Fibonacci level.
GBP/USD daily chart
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