09:37, 16 May

Drops to the Three Month Low Near 1.28 on PM’s Brexit Deal

In the last week or so the GBPUSD has fallen sharply from the key level at 1.32 down to a three month low near 1.28. It had previously done well to rally from a two month low up to the 1.32 level before sellers jumped in and turned the sterling away strongly. It spent around six weeks or so falling lower from a nine month high near 1.34 back down to the two month low before the rally, with that medium term trend now being extended with the recent decline. There are few signs of any support presently and even if it does rally a little, it faces possible further resistance at the 1.32 level again.
In early March the GBPUSD fell sharply from an eight month high back down below the key level of 1.32 before rallying again and reaching a nine month high shortly afterwards. Late February was significant as the sterling moved so strongly breaking through the key level for the first time in many months on its way to the eight month high. The other key level presently is 1.27 which may be called upon should the GBPUSD continue to fall lower from its present trading levels.

The sterling enjoyed a very positive January as it has moved from below 1.27 up to a three-month high at the resistance level around 1.32, before a subsequent decline. Starting in mid-December, the GBPUSD had slowly but steadily climbed higher from a two year low below 1.25 up to the current key level of 1.27 and beyond. As expected, it met some resistance from the 1.27 level at the end of last year as multiple attempts to push higher were thwarted and now that it has cleared, you could expect the pound to receive some support from this level should it be called upon.

The Brexit saga continues to drag on with the Brexit Secretary Stephen Barclay believing that the prime minister's Brexit deal will be "dead" if the withdrawal bill does not pass in the Commons in June.  Mr Barclay said the bill, which is a critical component will be considered by British MPs in the week beginning 3rd June.  Mr Barclay said if the plan is rejected by MPs, the UK will face no deal, or Article 50 could be revoked, therefore no Brexit.  British PM May has been asked repeatedly over the journey of whether she would resign if her Brexit deal was again rejected by MPs, and she has remained defiant throughout.  On a recent challenge, she replied that the withdrawal bill will "ensure that we deliver Brexit for the public".  A spokesman for the Leader of the Labour Party Mr Jeremy Corbyn has said Labour would not support the bill if no cross-party agreement were reached.  After PM May’s Brexit deal that was negotiated with the EU was rejected by British MPs three times, attempts to find a cross-party compromise began.  Speaking to the Lords' European Union Select Committee, Mr Barclay said the Withdrawal Agreement Bill (WAB) will be published "as soon as possible".  He said: "I think if the House of Commons does not approve the WAB, then the Barnier deal is dead in that form and I think the House will have to then address a much more fundamental question between whether it will pursue... a no-deal option or whether it will revoke."