GBPUSD

09:23, 17 January

Near 1.29 after No Confidence Vote and Despite Massive Brexit Defeat

In the last month the GBPUSD has slowly but steadily climbed higher from a two year low below 1.25 up to the current key level of 1.27 and beyond, reaching a two month high above 1.29 in the last few days. As expected it met some resistance from the 1.27 level in the last few weeks as multiple attempts to push higher were thwarted and now that it has cleared, it is now experiencing some support from this same level.

 

In early December, the 1.27 level gave way to immense selling pressure, after the sterling was again enjoying much needed support from this level as it had firmly established as a key support level as the currency pair had enjoyed considerable support from this level on several occasions in the few months prior.

Should the GBPUSD drop through the support at this level, then it could fall considerably further with no obvious support levels nearby. Around mid-September the GBPUSD reached a two month high right at 1.33 and it is starting to show signs of possible returning to somewhere near that level. Throughout July the GBPUSD was content to trade in a very small range right around the 1.31 level. It was also feeling some selling pressure from the resistance level at 1.32, which may play a role should the GBPUSD rally higher from its current levels.

Throughout May 2018 the GBPUSD dropped dramatically from the resistance level around 1.43 down to the 1.32 level. It has really struggled to recover from that significant fall and now may be paying more attention to the significance of the 1.20 level which provided strong support to the pound a couple of years ago.

U.K. Prime Minister Theresa May has been crushed in the crucial vote on her Brexit plans in the House of Commons, the U.K.'s lower house of parliament, triggering political chaos that could lead to a disorderly exit from the EU or even to a reversal of the 2016 decision to leave.  Lawmakers voted by 432 to 202 to reject the deal, in reportedly the largest defeat for a sitting party.  Despite the result, and expressing a defiant tone, the British Prime Minister told parliament that she wanted to show those who voted to leave the EU that it was her "duty to deliver" on Brexit.  After the massive loss, the opposition Labour Party leader Jeremy Corbyn promptly called a vote of no confidence in May’s government, which the PM survived.With around 70 days left, the United Kingdom is now entrenched in a very deep political crisis as it tackles with how, or even whether, to exit the European bloc that it joined in 1973.  So far PM May has refused to retreat from her unpopular deal, which envisages close trading ties with the European Union (EU) after leaving in March.  Many believe this defeat has deepened the uncertainty over the future of Brexit.  Possible outcomes include another referendum or a disorderly exit.