Brexit Scenarios And GBPUSD Forecast
March 12th: Parliament votes for May – EU revised plan.
Expectation: NO
If Parliament approves the plan;
1. Sharp Rally of GBP pairs.
2. March 21th – March 22nd: EU votes fort he agreements
3. Trade Talks between UK-EU begins.
4. Sterling may slow down because of the uncertainty.
If the UK Parliament rejects the agreement;
March 13th: Parliament votes for No Deal Brexit.
Markets Expectations: NO
If Parliament approves No Deal Brexit;
1. Sell off in Sterling
2. Boe projection: 25% decline in Sterling. %8 decline in incomes.
3. BoE may go to a rate hike operation to protect the Sterling.
4. Increase in the Global Uncertainty.
If UK Parliament says NO to No Deal Brexit
March 14th: Vote on delayed Brexit
The market is pricing this scenario. The bullish trend in Sterling started with the expectations of delayed Brexit.
If Delayed Brexit Scenario becomes validated, we may see a rather small Sterling rally after the parliament’s “YES” to a delayed Brexit.
However, a delayed Brexit will not be the end of the uncertainties. That is the reason for the latest retracement in Sterling.
As seen on the weekly chart, we see a measured move up printing. After making historical low 1.19000 by an Algo Crash – in 24 hours-, Cable tested 1.45000 key resistance. The fresh bearish movement was triggered by Brexit and FED’s rate hike cycle. Dips completed at 1.25000 and Cable entered into the recovery period. The target of the formation is 1.48000 but a few fundamentals are needed and it is not the subject of this forecast. 1.30100 is the key support. If GBPUSD makes daily closings above 1.30100, we could see the pair moving towards 1.34500 – 1.38000 with an accelerated bullish trend.
On the smaller charts, as we have published last week, an inverted head & shoulders pattern became validated.1.32200 is the resistance and the invalidation level of the pattern is 1.29800.
Cable broke 1.32200 and tested 1.33500 resistance. But this breakout attempt and the bullish move were not sustainable due to Brexit uncertainty. The pair pulled back towards 1.30100 support and ended the week at 1.30120.
“YES” to revised May-EU Plan: ( Probability 0.01% ) Our trade plan is to buy and add long at the closing above 1.32200 targets 1.34500 and 1.37000 with a stop loss below 1.30100.
Delayed Brexit: ( Probability 99.8 % ) Our trade plan is to buy and add Long at the closing above 1.32200 targeting 1.34500 and 1.37000 with a stop loss below 1.30100. Second Referendum Scenario: Targets 1.4000-1.45000
No-Deal Brexit: To sell GBPUSD targets 1.2700 and 1.23000. And if we take “BoE’s projection of 25% decline” into consideration, this sell of may continue towards 1.2000.
Gamblers: They may buy or sell. No worries, only the table wins.
Expectation: NO
If Parliament approves the plan;
1. Sharp Rally of GBP pairs.
2. March 21th – March 22nd: EU votes fort he agreements
3. Trade Talks between UK-EU begins.
4. Sterling may slow down because of the uncertainty.
If the UK Parliament rejects the agreement;
March 13th: Parliament votes for No Deal Brexit.
Markets Expectations: NO
If Parliament approves No Deal Brexit;
1. Sell off in Sterling
2. Boe projection: 25% decline in Sterling. %8 decline in incomes.
3. BoE may go to a rate hike operation to protect the Sterling.
4. Increase in the Global Uncertainty.
If UK Parliament says NO to No Deal Brexit
March 14th: Vote on delayed Brexit
The market is pricing this scenario. The bullish trend in Sterling started with the expectations of delayed Brexit.
If Delayed Brexit Scenario becomes validated, we may see a rather small Sterling rally after the parliament’s “YES” to a delayed Brexit.
However, a delayed Brexit will not be the end of the uncertainties. That is the reason for the latest retracement in Sterling.
As seen on the weekly chart, we see a measured move up printing. After making historical low 1.19000 by an Algo Crash – in 24 hours-, Cable tested 1.45000 key resistance. The fresh bearish movement was triggered by Brexit and FED’s rate hike cycle. Dips completed at 1.25000 and Cable entered into the recovery period. The target of the formation is 1.48000 but a few fundamentals are needed and it is not the subject of this forecast. 1.30100 is the key support. If GBPUSD makes daily closings above 1.30100, we could see the pair moving towards 1.34500 – 1.38000 with an accelerated bullish trend.
On the smaller charts, as we have published last week, an inverted head & shoulders pattern became validated.1.32200 is the resistance and the invalidation level of the pattern is 1.29800.
Cable broke 1.32200 and tested 1.33500 resistance. But this breakout attempt and the bullish move were not sustainable due to Brexit uncertainty. The pair pulled back towards 1.30100 support and ended the week at 1.30120.
“YES” to revised May-EU Plan: ( Probability 0.01% ) Our trade plan is to buy and add long at the closing above 1.32200 targets 1.34500 and 1.37000 with a stop loss below 1.30100.
Delayed Brexit: ( Probability 99.8 % ) Our trade plan is to buy and add Long at the closing above 1.32200 targeting 1.34500 and 1.37000 with a stop loss below 1.30100. Second Referendum Scenario: Targets 1.4000-1.45000
No-Deal Brexit: To sell GBPUSD targets 1.2700 and 1.23000. And if we take “BoE’s projection of 25% decline” into consideration, this sell of may continue towards 1.2000.
Gamblers: They may buy or sell. No worries, only the table wins.
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