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Brexit Latest: PM May Needs Support From a Fractured Cabinet

Brexit Latest: PM May Needs Support From a Fractured Cabinet

2018-10-16 08:27:00
Nick Cawley, Analyst
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Sterling (GBP) Price and Brexit News:

  • Senior Conservative MPs may try to force a hard Brexit.
  • GBPUSD back above all three moving averages.

The DailyFX Q4GBP Forecast is available to download.

GBPUSD Pushes Ahead but Domestic Drama May Weigh

Sterling has recouped all of Monday’s losses against the US dollar and is pushing back towards 1.3200 as EU members make supportive noises for a negotiated deal. Germany’s EU minister Michael Roth said that a Brexit deal was close, while Austrian EU minister Gernot Blumel said that negotiations were going in the right direction, although there was not enough compromise yet. The two-day EU Summit starts on Wednesday and further headlines are expected, both before and during the meeting.

While the tone out of the EU is seemingly more conciliatory, UK PM Theresa May may well face a rebellion from within her own party if her disliked Chequers plan is not scrapped. Eurosceptic Conservative MP’s believe the Chequers plan leaves the UK in thrall of the EU and advocate a looser Canada+ free-trade agreement. Eurosceptic ministers met Monday night ahead of today’s Cabinet meeting. If these ministers are to trigger a vote of no-confidence in the Prime Minister, they will need 48 letters calling for one. So far media reports suggest that 35 letters may have been submitted.

GBPUSD has so far ignored the No.10 political in-fighting and continues to press higher. The pair now trade above all three moving averages on the four-hour chart and continue to eye 1.3200 in the near-term. Cable traded at 1.2662 two month ago.

Recent Sterling/Brexit Articles:

UK Week Ahead: Brexit Update and Heavyweight Data | Webinar.

GBP: Heightened Risk Doesn’t Reward Position-Taking This Week.

Brexit Analysis: How GBP and Stocks Might React to Alternative Outcomes.

GBPUSD Four Hour Price Chart (August 7 – October 16, 2018)

Brexit Latest: PM May Needs Support From a Fractured Cabinet

IG Client Sentiment shows that retail traders are 57.4% net-long GBPUSD, normally a bearish contrarian set-up. However, recent daily and weekly positional shifts suggest GBPUSD may soon move higher.

Traders may also be interested in two of our trading guides – 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 nicholas.cawley@ig.com

Follow Nick on Twitter @nickcawley1

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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