The Cable And Brexit: be prepared for weak and uncertain signals
After it was delayed in December, British MPs will finally vote on Theresa May’s Brexit deal bringing two years of negotiations, debates, and postponements to a conclusion. Scheduled to convene at 6 p.m. (GMT), the House of Commons is expected to deliver the verdict on the withdrawal agreement.
If the election then takes place, the result is expected around eight o’clock or maybe later. While an accurate cannot be forecasted at this point, traders should prepare for stronger price movements as the result approaches.
Let’s take an inventory of the cable (GBP/USD):
On the larger picture (weekly chart) we can see that the market over the past few weeks tried to push away from the 1.250 to 1.273 price level. If this succeeds, the last downward movement from early 2018 can be corrected. However, there are no strong signals for a clear trend up till to now.
GBP/USD weekly chart. Source: ActivTrader
There is also no clear trend on a 4-hour basis. Since mid-2018, the market stuck between 1.2470 on the downside and 1.3220 on the top. The market is currently trading almost in the middle of these two marks.
Possible scenarios that we might expect:
If the market should break through the price level at approx. 1.2675 to the downside, there is a high probability that we will head for price levels at 1.2475 again. If, on the contrary, we break out of the current movement to the upside, let’s say at a price level of 1.2960, at that point there is a probability that we will reach the upper edge of the range at 1.3220.
GBP/USD 4-hour chart. Source: ActivTrader
In any case, keep in mind that there can be swift movements and also false breakouts. Adjust your position size according to your account and risk profile! Today is bound to be a day unlike any other.
Written by Daniel Schuetz, External Analyst
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