Is the GBP Heading Back to Its pre-Brexit Referendum Highs?

Currently we believe that the Pound is setting up for a major swing back to the upside. Both the long term (monthly) chart and the daily chart are suggesting further bullish movement ahead.

GBPUSD

But let us step back a bit: currently the situation is more unclear than before as in the past days British PM Theresa May’s proposed plans for a soft Brexit as well as a hard Brexit have both been rejected by the UK Parliament.

GBPUSD

So What Lies Ahead?

As Theresa May clearly does not want to leave her position (she has already survived a no-confidence vote back in January anyway), she would also not lose face in the end if she calls out for a new referendum anytime soon. It is important to keep in mind however, that May has made it clear a number of times that she does not support the idea for a second referendum but could call out for one should the Parliament be unable to agree on a Brexit plan.

We believe that the markets are taking this into consideration and could break to the upside soon. If a new referendum follows through we could see the Pound moving to the old Highs at around the 1.40 area at some point. We bought GBPUSD at 1.3315 with SL at 1.3075 and TP at around 1.3990.

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