- This week saw the return to business for the UK Parliament and from Wednesday 9ht January the debate restarts on Prime Minister Theresa May’s Brexit deal.
- At the moment, the high expectation is that this deal will struggle to get voted through, and the coming days will be of interest, possibly giving clues as to what could happen in the aftermath of the deal not passing.
- There are numerous scenarios, including but not limited to; a renegotiation with the EU, a push forward with a “no deal” Brexit, PM May resigning, a vote of no confidence in the government, a general election and a second referendum on leaving the EU.
- Here we spotlight the Pound versus the US Dollar, GBPUSD, which has been rallying in early 2019, primary though due to a weakened US dollar (in light of a more dovish view for US Fed rate hikes in 2019).
GBPUSD intermediate-term resistance threats
A probe to the topside Monday above 1.2773 impulse resistance to build on Friday’s firm rebound through various resistances, fully rejecting negative forces from the early 2019 plunge (through the cycle low at 1.2476), to keep the bias higher for Tuesday.
The early December push through key 1.2694 support set an intermediate-term bear trend BUT risk is now for an intermediate-term shift to neutral above the key 1.2840/64 area and maybe to bullish above 1.2928.
- We see an upside bias for 1.2815; break here aims for the key 1.2840/64 area, then 1.2895 and maybe even towards critical 1.2928.
- But below 1.2719/11 opens risk down to 1.2672/70 and maybe 1.2616.
Intermediate-term Outlook – Downside Risks: We see a downside risk for 1.2366, 1.2109, 1.2000/1.1987 and 1.1950.
- What Changes This? Above the 2840/64 resistance area shifts the outlook back to neutral; above 1.2928 is needed for a bull theme.
4 Hour GBPUSD Chart