GBPUSD at Risk from Brexit Vote and Bank of England
GBPUSD news and analysis:
- UK Prime Minister Theresa May faces another potentially damaging Brexit vote in Parliament Wednesday.
- The Bank of England will likely keep UK interest rates unchanged this week while an increase in August is far from nailed on.
- Together, those factors mean a recovery in GBPUSD is improbable.
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Downside risk for GBPUSD
GBPUSD will likely remain under a cloud this week as UK Prime Minister Theresa May faces another challenge to her Brexit policy in the House of Commons Wednesday. That follows a vote in the House of Lords which dealt another blow to her authority by voting in favor of Parliament having a “meaningful vote” on the final Brexit deal reached between the UK Government and the EU.
That decision will likely be reversed by the Commons but May’s position remains precarious as anti-Brexit rebels in her own Conservative Party have warned they could “collapse” the Government if they disagree with the final outcome of the withdrawal talks.
This all comes at a time when GBPUSD is already at its lowest levels since November last year and has lost ground in four of the past five sessions, with the decline seemingly accelerating.
GBPUSD Price Chart, Five-Minute Timeframe (June 19, 2018)
Bank of England in focus
GBPUSD also has to deal with a meeting of the Bank of England’s monetary policy committee this Thursday. It will almost certainly leave UK interest rates unchanged and a hike on August 2 is by no means certain. The market-implied probability of an August hike has fallen to a third from nearly half earlier this week.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.