Pound stays solid ahead of indicative Brexit votes

Intermediate
  • The UK parliament prepares for indicative votes later today (Wednesday 27th March, scheduled for the evening) as the 29th March initial Brexit deadline draws closer.
  • Parliament has scheduled 16 (yes, sixteen) options to choose from, increasing very short-term uncertainty.
  • Although the Pound remains hesitant in the short-term, the underlying tone remains solid versus both the US Dollar and Euro.
  • More recently on Tuesday, Prime Minister Theresa May’s Brexit deal received a somewhat unexpected boost as two Eurosceptic members of her own party (Jacob Rees-Mogg and Michael Fabricant) seemed to indicate they may be willing to vote for her deal, with few other options now available.
  • Our focus today on the Pound is reflected by the much-watched Forex rate versus the US Dollar, GBPUSD, commonly referred to in currency markets as Cable.

GBPUSD bias stays higher

A dip and a rebound from just above our 1.3149 support (from 1.3157) for another probe higher Tuesday (as on Monday) to prod above 1.3247/51 resistances, reinforcing last Friday’s dip and firm bounce from just below our support at 1.3087 (from 1.3079), leaving the bias higher into Wednesday.

The aggressive, mid-March advance through the late February peak at 1.3350 switched the intermediate-term outlook to bullish.

For Today:

  • We see an upside bias for 1.3261; break here aims for1.3311 and 1.3331, maybe to the cycle high at 1.3381
  • But below 1.3157/49 opens risk to 1.3079, maybe down towards 1.3004/03.

Intermediate-term Outlook – Upside Risks: We see an upside risk for 1.3473.

  • Higher targets would be 1.3608 and 1.4000
  • What Changes This? Below 1.2947 shifts the intermediate-term outlook straight to a bear theme.

4 Hour GBP/USD Chart

GBPUSD chart

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