GBP/USD analysis: Pound collapses ahead of vote, bounces sharply afterwards

Valeria Bednarik FXStreet

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 There were four amendments proposed but three of them were withdrawn, with only the one proposed by John Baron submitted to vote.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

View Live Chart for the GBP/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

EUR/USD stays well offered below 1.1800

The selling pressure on EUR/USD is picking up pace, with the pair slipping decisively below the key 1.1800 level and sliding to fresh two week lows as Wednesday’s session draws to a close. The move lower comes as the US Dollar finds renewed strength after the latest round of US data and the release of the FOMC Minutes. Next of note on the docket will be the US weekly Initial Jobless Claims.

GBP/USD reaches multi-day lows near 1.3500

GBP/USD reverses its initial upside momentum and is now adding to previous declines, approaching the 1.3500 region on Wednesday. Cable’s downtick comes on the back of decent gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.

Gold battle to regain $5,000 continues

Gold is back on the front foot on Wednesday, shaking off part of the early week softness and challenging two-day highs near the $5,000 mark per troy ounce. The move comes ahead of the FOMC Minutes and is unfolding despite an intense rebound in the US Dollar.

Bitcoin has found or is near a bottom, extended consolidation to follow: K33

Bitcoin (BTC) is nearing or has already established a bottom, which could be followed by a sustained period of slow price movement, according to K33.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Sui extends sideways action ahead of Grayscale’s GSUI ETF launch

Sui is extending its downtrend for the second consecutive day, trading at 0.95 at the time of writing on Wednesday. The Layer-1 token is down over 16% in February and approximately 34% from the start of the year, aligning with the overall bearish sentiment across the crypto market.