Article by ForexTime
Sterling offered a fairly muted reaction on Wednesday evening despite UK Prime Minister Theresa May narrowly surviving a vote of no-confidence in Parliament.
The relatively subdued price action is likely based on the fact that this outcome was already heavily priced in. With May’s victory removing an element of uncertainty at a time where Brexit continues to drain investor confidence, the British Pound has scope to edge higher in the near term. However, this illusion of stability is unlikely to last, especially when considering how the Prime Minister only has a few days to present an alternative Brexit plan to Parliament.
Expectations seem to be growing by the day over the government extending Article 50 in a bid to prevent the UK from crashing out of the European Union without a deal in place. Investors will be paying very close attention to see whether May is able to secure further concessions on the Irish border backstop from the European Union. If Brussels continues to play hardball on the backstop clause, expectations are poised to mount over a Norwegian style Brexit in the cards or in extreme cases a second referendum. With the Pound’s outlook mired by Brexit uncertainty and political risk at home, investors should fasten their seatbelts and prepare for a rough and rocky ride ahead.
In regards to the technical picture, the GBPUSD’s direction remains influenced by Brexit headlines. There needs to break above 1.2920 to open a path higher towards the psychological 1.3000 level.
Get our Weekly Commitment of Traders Report: - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.
Get Our Free Metatrader 4 Indicators - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.
Article by ForexTime
ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com