- GBP/USD rejected key levels
- Brexit uncertainty
- U.S. Interest Rates
Price Movement
Since yesterday, GBP/USD had been bearish and moved for more than 100pips downwards.
Trend
Overall, GBP/USD is trending upwards.
Macro Background
With the recent U.S. government shutdown, the U.S. Federal Funds Rate is expected to maintain at 2.50%. If it is released at a different figure, expect high volatility and price movements. Nonetheless, many will be looking out for hints in the FOMC statement on when the next rate hike may be and how many hikes will be made this year.
Important Issue
This morning (around 0300 SGT), the British Members of Parliament (MPs) voted on a series of amendments to Theresa May’s statement on the defeat of her Brexit bill. Only 2 out of 7 amendments were passed, the Spelman Amendment and the Brady Amendment. The market reacted negatively to this outcome, resulted in GBP/USD dropping more than 100pips.
Spelman Amendment: It states that the United Kingdom will not leave the European Union without a deal.
Brady Amendment: It states that the Brexit backstop arrangement is to be replaced with an alternative.
(Note:The Brexit backstop is a deal struck by PM May in Brussels to ensure no “hard border” between Ireland and Northern Ireland. Not having a “hard border” means that goods will still be able to cross the border without checks.)
Technical
Yesterday, GBP/USD tested and rejected the 1.32 level for the second time in this week. Due to the negative outcome from the voting this morning, GBP/USD also broke the 1.31 level and is currently hovering just below this level.
Price Levels
Current Price: 1.30869
Next Resistance: 1.31658
Next Support: 1.30000