British Pound Rolls Over as Brexit Plans are Almost Ripped Up

  • Prime Minister Theresa May suffered another defeat on her Brexit deal by a huge 149 votes.
  • The Pound fell as a result of the defeat, but it was the 288pip range that caught traders’ interest.
  • The key technical levels on the Pound are 1.3320 on the topside and 1.2950 on the downside.

All eyes were on the Brexit vote overnight, and the market did not disappoint with volatility running high.

Theresa May’s Brexit deal was defeated by 149 votes which means the vote now goes to the House of Commons to vote on a ‘no deal’ Brexit.

According to Bloomberg, the Brexit deal is all but dead, with May’s Cabinet likely to force the government to rip up its Brexit plans and start again.

Going forward

It is clear the market wants to see this over and done with as they are fed up with the continued uncertainty, negotiations and volatility.

Now it is time for the House of Commons to vote on a ‘no deal’ Brexit today (Wednesday) with the likelihood that the MPs vote not to back a ‘no deal’ Brexit.

Then it will move to Thursday and the MPs to vote on an extension to Article 50, thereby delaying Brexit. This is what the market is anticipating over the next few days.

Key technical levels to watch on the GBP/USD

There is a medium-term ascending triangle building on the Pound as both the recent lows and highs have been getting higher.

As anticipated, volatility has been increasing as you can see with the rise in the Average True Range (ATR) indicator at the bottom of the chart.

Resistance at the 1.3300 to 1.3320 level is key as we have a number of touch points going back to the 22nd of June 2018.

If the Pound were to close above the short-term resistance at 1.3320, the potential upside, projecting the height of the ascending triangle, could be as high as 1.4100 against the US dollar. A more conservative figure, taken from the height going back to the 14th of February, could be around 1.3840

A breakdown of the upward trendline has the potential for the Pound to either consolidate in the huge range between 1.2500 and 1.3300, which is 800 pips, or possibly continue lower past that line of support.

The information provided here has been produced by third parties and does not reflect the opinion of AxiTrader. AxiTrader has reproduced the information without alteration or verification and does not represent that this material is accurate, current, or complete and it should not be relied upon as such. The Information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.