- Brexit remains the key driver for the Pound in broader markets as PM May seeks to delay a critical divorce bill vote.
- Warnings from Brussels that no further negotiation room is available are becoming increasingly stern.
GBP/USD is trading sluggishly just beneath the 1.2650 zone heading into Friday’s London markets, and the Cable market has stalled out as traders await further moves on Brexit, with little on the data docket to cap off a volatile week that has seen the Sterling peak-to-trough around 280 pips against the greenback, and currently sits at the 50% retrace of the week’s low at 1.2477.
UK Prime Minister Theresa May won her party’s no-confidence vote this week, with Tory conservatives voting 200-117 in favour of retaining May as the party’s leader, but the 83-seat spread has fired a keen warning shot across Mrs. May’s bow, and the lead in votes the PM enjoyed is likely due to the fact that she promised to not run for re-election in the next bid for a Tory leader.
With the Tory confidence vote out of the way, Brexit woes can continue afresh to drag on the Cable: Theresa May could still face a more drastic no-confidence vote in the UK’s House of Commons, which would dissolve her ruling government, and the current Brexit proposal on the table still has yet to be voted on by parliament after May pulled the critical vote last-minute earlier this week instead of facing a crushing defeat. May made a last-minute jaunt to Brussels to seek even more negotiations from EU leaders in Brussels, but was met with flat rejections as the European Union firmly puts its foot down, declaring that no further concessions or negotiations will be taking place; the offer on the table is all-or-nothing, and little else remains but to put the divorce bill to a parliamentary vote, a move that PM May and her cabinet are hoping to delay until January in an effort to wind down the Brexit clock in hopes that the lack of negotiating time will see nay voters turn into supporters and get her best-of-neither-world proposal passed.
GBP/USD Levels to watch
Current Cable action currently sees the GBP/USD pair strangled just beneath a bearish-tilted 50-period moving average on the 40hour candlesticks, currently perched at 1.2670, and as FXStreet’s own Valeria Bednarik noted, “the GBP/USD pair trades around 1.2650, developing above a firmly bearish 20 SMA and well below the 200 EMA, which heads marginally lower at around 1.2820, while technical indicators have lost the positive momentum and now hover around their midlines. All of these is not enough to confirm an upcoming decline, yet skews the risk to the downside, also headed in this direction from the fundamental front. The pair has a relevant intraday low at 1.2591, now the immediate support, en route to a retest of the yearly low of 1.2476.”
Support levels: 1.2590 1.2555 1.2510
Resistance levels: 1.2665 1.2700 1.2745
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