GBPUSD, H4, H1
The Pound has found a footing after the Conservative Party’s vote of confidence in Prime Minister May. She cannot now be challenged again for 12 months, and there seems to be a “morning after the night before” feeling in markets. But the problem is that she survived with almost a third of her party having voted against her, suggesting that the EU Withdrawal Agreement deal is nearly certain to be rejected by Parliament. Unless, that is, in the highly unlikely scenario that the EU gives a major concession by term-limiting the Irish border backstop clause, which would render the whole point of it as meaningless; something that Ireland, in the strong negotiating position that it is in (knowing that the vast majority in the UK Parliament is ardently against leaving the EU without a deal) is not in all likelihood going to acquiesce to.
Uncertainty is the prevailing mood swirling around Sterling and the wider UK economy. However, this morning, Cable has found a bid from the 1.2600 zone overnight into the 200-period moving average at a 1.2670. R1 sits at 1.2705, with further strong resistance at the 1.2795/2800 zone. Support, below 1.2600, is at the daily pivot point and lower Bollinger Band (also the H1 20-period moving average) at 1.2590 and S1 at the important psychological 1.2500 level.
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Stuart Cowell
Head Market Analyst
HotForex
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