Mario Blascak, PhD
Independent Analyst
- Brexit summit sealed the Brexit deal on Sunday but failed to support Sterling on a massive basis.
- The UK Brexit Secretary Stephen Barclay said it is going to be a tough task to get the Brexit deal past UK parliament.
- The GBP/USD needs to break above 1.3000 to escape from the downward sloping trend.
The GBP/USD is trading little changed on the upside t around 1.2840 on Monday after the UK and the EU sealed the Brexit agreement at Sunday Brexit summit, supporting the UK Prime Minister Theresa May in her effort to have the deal passed in the UK parliament. The UK Brexit Secretary Stephen Barlay already indicated that the parliamentary vote is expected to be a hard job to accomplish.
The European Commission President Jean-Claude Juncker was aware of the fragile position of Theresa May and after the weekend Brexit summit he warned the UK members of parliament saying that “those who think that, by rejecting the deal, they would get a better deal, will be disappointed.”
The Brexit agreement was approved by the European union’s 27 member states representatives and now the UK’s House of Commons will have to approve it 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.
The GBP/USD is still moving in a downward sloping trend, with a little boost 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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