GBP: Current Brexit Deal Won't Pass Through UK Parliament
Fundamental Forecast for GBP: Neutral
Sterling (GBP) Talking Points:
- Brexit continues to dominate market thinking and the surrounding noise is going to ramp up.
- Economic calendar is quiet; BoE governor Carney speaks on Tuesday.
The DailyFX Q4 GBP Forecast is available to download.
It remains extremely risky taking a Sterling position at present as we head towards the Parliamentary vote on December 11. Ahead of this vote there will be a five-day debate in Parliament – December 4, 5, 6, 10 and 11 – where MPs will be able to put forward amendments to the Brexit bill with a maximum of six of these chosen by the Speaker of the House. While these amendments are not binding they are likely to heap pressure on UK PM May ahead of the vote. During next week the ‘noise’ around Brexit will increase further, leaving traders at the whim of rumor and biased commentary. In this situation it is difficult, if not impossible, to make a considered Sterling trade.
As we stand, PM May is very unlikely to get her Brexit bill passed through the House of Commons as large swathes of both Conservative and Labour MPs have already stated that they will vote against it. This leaves the next step unclear with various options available.
The economic calendar is quiet next week with the main point of interest BoE governor Mark Carney’s speech at the House of Commons on Tuesday at 09:15 GMT. Governor Carney’s recent Brexit Impact analysis caused a certain amount of backlash after he said that in an extreme Brexit no-deal scenario that Sterling could fall by 25% from its current level. On Mondays we will take an in-depth look at all the UK data releases, Brexit analysis and other UK asset market drivers at 10:30GMT in our UK Key Events and Markets Webinarand will try and make sense of what is going on and how it will affect UK markets.
Sterling remains rangebound against the US dollar and is not expected to make a breakout until concrete news or Brexit proposals are announced. We remain neutral but acknowledge that the path of least resistance remains lower with the mid-August multi-month low at 1.2662 very much in play.
GBPUSD ……Price Chart (April - November 30, 2018)
IG Client Sentiment data show 72.2% of traders are net-long GBPUSD. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests that GBPUSD prices may continue to fall. However the combination of recent daily and weekly positional changes gives us a stronger GBPUSD-bearish contrarian trading bias
Traders may be interested in two of our trading guides, especially in times of volatility – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.
--- Written by Nick Cawley, Analyst
To contact Nick, email him at firstname.lastname@example.org
Follow Nick on Twitter @nickcawley1
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