The UK Parliament will be holding a vote on the Brexit agreement on Tuesday. This is the second attempt to push the bill to a parliamentary approval following the failed attempt earlier in December.
If you recollect, in December after British PM Theresa May failed to table the bill, it triggered a vote of no-confidence. The PM managed to win the no-confidence vote but little has changed since then on the agreement with the EU.
It is quite likely that the bill will be put to vote. Speculation is rife that the bill will be rejected outright by the parliament. This scenario could potentially push the UK further into political chaos.
According to the law, the UK leaders cannot call for another no-confidence vote for at least a year. As a result, it could lead to a stalemate. There are some who expect that the UK could hold a second Brexit vote. But that is unlikely to happen.
This increases the risks of the UK crashing out of the EU on March 29 with no Brexit arrangement. There are also talks that the UK leadership could ask for an extension of Article 50 and push back the March 29 deadline further until a consensus is reached.
What does this mean for the GBPUSD?
From a technical outlook, the GBPUSD currency pair is clearly showing signs of an upside bias. Since late October, the cable has been inching lower. The GBP touched lows of 1.2427 briefly on Jan 3, 2019 before pushing higher.
Overall, the consolidation in the currency pair since early September 2018 has lead to a descending wedge pattern being formed.
However, prior to this, price action formed a bearish descending triangle pattern with the support at 1.2700 briefly breached. As price fell to lows of 1.2427, the GBPUSD quickly reversed direction and now stands firm above 1.2700 support.
Heading into the parliamentary vote, I expect the GBPUSD to be volatile. As a result, there is a good chance that the GBPUSD will once again test the 1.2700 level before breaking to the upside. The minimum upside target is seen at 1.3100 that could be achieved.
Given the conditions, this should be a swift 300 pip rally. Of course, it is hard to say if the target will be reached within the day. For the moment, keep an eye out on the GBPUSD as it is poised to make an upside breakout.
Target: 1.3100
Entry: 1.2700
Stops: 1.2600
It would be difficult to combine the technical analysis with the fundamentals as the rally in the GBPUSD could be for a number of reasons.
A rejection of the Brexit vote could mean that investors will be optimistic that either a new referendum will be held (which is unlikely) or the Brexit date will be pushed further.
Disclaimer: The views expressed in this article are my own. The article is only intended for educational purposes and not an investment advise. Trading is risky and not suitable for all.
If you recollect, in December after British PM Theresa May failed to table the bill, it triggered a vote of no-confidence. The PM managed to win the no-confidence vote but little has changed since then on the agreement with the EU.
It is quite likely that the bill will be put to vote. Speculation is rife that the bill will be rejected outright by the parliament. This scenario could potentially push the UK further into political chaos.
According to the law, the UK leaders cannot call for another no-confidence vote for at least a year. As a result, it could lead to a stalemate. There are some who expect that the UK could hold a second Brexit vote. But that is unlikely to happen.
This increases the risks of the UK crashing out of the EU on March 29 with no Brexit arrangement. There are also talks that the UK leadership could ask for an extension of Article 50 and push back the March 29 deadline further until a consensus is reached.
What does this mean for the GBPUSD?
From a technical outlook, the GBPUSD currency pair is clearly showing signs of an upside bias. Since late October, the cable has been inching lower. The GBP touched lows of 1.2427 briefly on Jan 3, 2019 before pushing higher.
Overall, the consolidation in the currency pair since early September 2018 has lead to a descending wedge pattern being formed.
However, prior to this, price action formed a bearish descending triangle pattern with the support at 1.2700 briefly breached. As price fell to lows of 1.2427, the GBPUSD quickly reversed direction and now stands firm above 1.2700 support.
Heading into the parliamentary vote, I expect the GBPUSD to be volatile. As a result, there is a good chance that the GBPUSD will once again test the 1.2700 level before breaking to the upside. The minimum upside target is seen at 1.3100 that could be achieved.
Given the conditions, this should be a swift 300 pip rally. Of course, it is hard to say if the target will be reached within the day. For the moment, keep an eye out on the GBPUSD as it is poised to make an upside breakout.
Target: 1.3100
Entry: 1.2700
Stops: 1.2600
It would be difficult to combine the technical analysis with the fundamentals as the rally in the GBPUSD could be for a number of reasons.
A rejection of the Brexit vote could mean that investors will be optimistic that either a new referendum will be held (which is unlikely) or the Brexit date will be pushed further.
Disclaimer: The views expressed in this article are my own. The article is only intended for educational purposes and not an investment advise. Trading is risky and not suitable for all.