STLG/USD Declines Following Cabinet Brexit Approval – Hits Support above 1.2696 - What next?
Wednesday night’s/Thursday morning’s news confirms U.K. Cabinet approves Prime Minister Teresa May’s Brexit plan – But rumours circulate over a ‘vote-of-no-confidence’ which would challenge her continued leadership – Stlg/US$ declines hard but tests downside support above 1.2696
U.K. Prime Minister Teresa May was successful in persuading a majority cabinet to approve here Brexit mandate but at some cost. A damning statement read in Parliament by Tory backbencher Jacob Rees-Mogg criticised the deal whilst the Brexit secretary Dominic Raab resigned accusing the EU as blackmailing Britain.
Tension are running high, but what does that mean for the currency, Stlg/US$?
In recent months, the Elliott Wave model shows Stlg/US$ unfolding into a similar path as other major currencies versus the US$ dollar. That means there’s only a limited short-term effect from the Brexit drama and various news stories that has been unravelling over the last couple of years. The more important driver is the US$ dollar cycle which resumed its 7.8-year decline last year.
Like most other US$ dollar currency pairs, Stlg/US$ has been engaged in a temporary corrective decline this year which has forced Stlg/British Pound lower against the dollar from last April’s high of 1.4377. This corrective downswing remains incomplete, targeting levels towards 1.2374+/-, max. 1.2062+/- over the next several months – that’s consistent with comparable declines in the Euro/US$ too.
But shorter-term, we expect to see a push higher following overnight declines with key support at 1.2696. Whilst holding above 1.2696, there are two probable scenarios unfolding, one which pushes Stlg/US$ higher now towards 1.3492+/- (see fig #1) and the other towards 1.3200+/- (see fig #2). Both allow a decline afterwards as the final sequence of this year’s correction, to either 1.2374+/- or max. 1.2062+/-.
The Brexit approval is not the final piece of negotiation as the stage now turns towards the possibility of a ‘vote-of-no-confidence’ triggering a leadership challenge. But such actions are seen to be submissive and subsumed into the Elliott Wave model of price-projection which means that whilst levels hold above 1.2696, the short-term outlook is at least bullish.
WaveTrack International and its related publications apply R.N.Elliott's "The Wave Principle" to historical market price activity which categorises and interprets the progress of future price patterns according to this methodology. Whilst it may be reasonable to deduce a course of action regarding investments as a result of such application, at no time or on any occasion will specific securities, futures, options or commodities of any kind be recommended for purchase or sale. Publications containing forecasts are therefore intended for information purposes only. Any opinion contained in these reports is only a statement of our views and are based on information we believe to be reliable but no guarantee is given as to its accuracy or completeness. Markets are volatile and therefore subject to rapid an unexpected price changes. Any person relying on information contained in these reports does so at their own risk entirely and no liability is accepted by WaveTrack in respect thereof. © All rights are copyrights to WaveTrack. Reproduction and / or dissemination without WaveTrack's prior consent is strictly forbidden. We encourage reviews, quotation and reference but request that full credit is given.