Although market
expectations remain elevated over May’s Brexit deal facing rejection by Members
of Parliament, there will be a stronger focus on what happens after the
“meaningful vote”. Will the government’s defeat on May’s deal result in Labour
triggering a no-confidence vote? Will Theresa May rush back to Brussels to
plead for further concessions from the EU? Amid the chaos and uncertainty, could
the UK government be forced to extend Article 50 beyond the planned exit date?
Are we going to witness a snap general election or even a second Brexit
referendum? While the outcome of tomorrow’s Brexit vote remains open to
question, it will certainly leave a lasting mark on the British Pound.
Theresa May is
scheduled to make a statement to Parliament this afternoon in a bid to gather
more support for her deal. Her speech runs of the risk of falling on deaf ears
if nothing new is brought to the table.
Sterling’s
outlook remains mired by endless uncertainty surrounding Brexit and ongoing
political drama in the House of Commons. The volatile price action witnessed in
recent days continues to highlight how the currency remains influenced by
Brexit headlines. In regards to the technical perspective, the GBPUSD secured a
weekly close above 1.2820, mostly due to Brexit noise. The 1.2820 level is seen
acting as support that pushes prices towards 1.2920. Although the technicals
are pointing to further upside in the near term, investors should keep in mind
that the Pound’s fate hangs on what happens after the Brexit “meaningful vote”
on Tuesday.
Are Dollar bulls running out of steam?
The Greenback
weakened against a basket of major currencies this afternoon as a political
impasse in Washington and expectations over the Fed taking a pause on rate
hikes reduced investor attraction for the currency.
Dollar Index
bulls have been missing in action in recent weeks with the breakdown below
96.00 suggesting that bears are back in the driver’s seat. Appetite towards the
Dollar is seen diminishing further if disappointing economic data threatens its
safe-haven status. With the economic calendar in the United States void of Tier
1 economic reports today, the Dollar is poised to be driven by price action.
Technical traders will continue observing how prices behave below 96.00.
Sustained weakness under this level could open a path back towards 95.00 and
94.20, respectively.
Commodity spotlight – Gold
Gold not only
remains supported by geopolitical risks but expectations over the Fed taking a
break on rate hikes this year.
The yellow metal
continues to shine brightly amid the uncertainty with weakness in both global
equity markets and the Dollar fueling upside gains. Taking a look at the
technical picture, Gold remains firmly bullish on the daily charts as there
have been consistently higher highs and higher lows. A solid breakout and daily
close above the psychological $1,300 level is seen opening a clean path towards
$1,308 and $1,324.
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