Search ForexCrunch
  • The UK House of Commons confirmed to have received an application for an emergency Brexit debate.
  • The headlines prompted some aggressive intraday short-covering move around the GBP crosses.
  • The upside remains capped ahead of 1.2300 amid expectations of a snap election on October 14.
     

After a rather volatile swing during the mid-European session, the GBP/USD pair now seems to have stabilized just above the key 1.20 psychological mark.

The pair remained heavily offered through the early part of Tuesday’s trading session and tumbled to an intraday low level of 1.1959 amid heightened uncertainty over Britain’s exit from the European Union (EU). The pair, however, witnessed a dramatic intraday turnaround, rallying around 125-pips in reaction to the incoming UK political development.

Brexit headlines remain an exclusive driver

The UK House of Commons confirmed that an application for emergency Brexit debate has been submitted, aiming at taking control of the daily agenda from the government. If it passes, that could lead to a vote forcing the government to request another three-month extension to the Brexit deadline from the EU.

Meanwhile, the fact that the government is set to table its own motion to hold new elections – likely on October 14 – added to the unpredictability at a time when the economy is already struggling and seemed to be one of the key factors that held investors from placing aggressive bullish bets, capping any strong follow-through.

The pair quickly retreated from daily tops, albeit has still managed to hold its neck comfortably above the 1.20 handle as investors look forward to the showdown in the UK parliament, which should continue to act as an exclusive driver of the pair’s momentum through the US session on Tuesday.

Technical levels to watch