Sterling stands at the back foot after parliament voted for Brexit delay
Cable ticked lower to 1.32 handle at the beginning of European session on Friday, following narrow range trading in Asia, after UK parliament voted for Brexit delay.
The lawmakers approved short delay in attempts to agree Brexit deal until 20 March, with option for further extension if no deal can be agreed by that time.
The parliament also rejected the scenario of a second Brexit referendum that was also on the table, giving the last chance to PM May to get her twice-rejected Brexit plan approved by Britain’s parliament next week, just before 21 Mar Eurogroup meeting.
Eventual agreement approval would be the first step as all 27 EU member countries need to vote for Brexit extension and caution is required as the bloc members may not approve it.
Sterling would be inflated and would possibly rise towards key Fibo barrier at1.3620, if UK parliament approves the deal next week, but could remain highly volatile and dip further if the plan will be rejected again.
Sterling stands at the back foot in early Friday’s trading, following Thursday’s close in red after hitting new multi-month high but failing to sustain gains above previous peaks.
Bulls are taking a breather and awaiting fresh signals, as daily indicators are mixed (momentum is weakening; stochastic heads north while RSI is flat) but MA’s remain in bullish setup.
Corrective dips could extend further but need to hold above 10SMA (1.3165) in order not to harm bulls and keep focus at the upside.
Weekly studies show more positive signals as indicators are trending up and repeated penetration of weekly cloud generated positive signal which requires confirmation on weekly close within the cloud (cloud base lays at 1.3248) that would unmask cloud top (1.3519) and 200WMA (1.3585).
Near-term structure would weaken on break and close below 10SMA that would open way for deeper pullback from new high at 1.3381 through rising 20SMA (1.3146) towards 1.3066 (30SMA) and possible extension towards converged 55/200SMA’s (1.2989).
Res: 1.3266; 1.3330; 1.3349; 1.3381
Sup: 1.3202; 1.3165; 1.3146; 1.3066