13th December 2018 - The confidence in May has solved only an interior problem among the Tories

Walid Salah Eldin

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13th December 2018 - 13th December 2018 - The confidence in May has solved only an interior problem among the Tories

GBPUSD could spike up to 1.2670 yesterday on May's ability to survive a confidence vote, following more than week of wide criticism inside the house of common over her reached Brexit plan.
After winning the support of 200 conservative lawmakers versus 117, May promised to step down as prime minister, before the next parliament election paving the way for new leadership to come.
Although the pressure can easily come back on the British pound, as the confidence vote could solve only an interior problem inside the Tories party.
While her handling of the Brexit talks is still widely refused by house of common members and there is no high hope for reaching a new deal with EU or mending this current widely refused plan.
As UK PM Theresa May cannot be rewarded by a new rescue plan for Brexit from EU which is watching the current split on Brexit in UK and if EU accepted to negotiate again and it is not highly expected there will be new costs in return.
While the key issue on refusing May's Brexit plan inside the house of common is still "the Irish Borders" problem which cannot be solved by No Brexit deal
While the only way to solve these Irish boarders problem is looking to have Irish acceptance to leave EU too and that is nearly impossible.
In the same time, the chance of re-Brexit referendum voting is rising up, As May's failure to reach acceptable deal can pave the way for new referendum on Brexit and that can lead easily to maintaining of UK existence inside of EU and that is very favorable to Brussels.

The European Court of Justice preceded May's Decision to delay voting on her Brexit plan which was supposed to be done last Tuesday by ruling that UK can unilaterally revoke Article 50, reversing Brexit and this resolution timing shows strong EU will to have UK in EU.
While the Northern Irish unionist DUP party "which shared in keeping May in power following snap parliament elections in June 2017" objects any Brexit deal can give a special status to the region, different from the rest of the UK.

BOE policymakers warned from their side more than once about the outcome of no Brexit deal before the house of common.
It indicated that not all of the banking sector is ready for no deal can lead to 8% fall in GDP in short-term, unemployment rising to 7.5%, inflation reaching 6.5% year on year, house prices slide by 30% and Sterling 25% weaker.

The markets have not given yet pricing on new referendum, as long as May who refuses that will is still in power.

But if there can be changing of the current political scene in favor of conducting new Brexit referendum, The Sterling and FTSEE 100 can go very higher than the current levels on rising of the business confidence and growth outlook in UK.

So, It is not expected to see crucial change in EU summit today to give May any new support, but what she has already gained of terms on the Brexit deal she had and that is not good for Sterling.
While the time is running out before crashing out of EU with no deal on next Mar. 29, the pressure increases on UK and her PM who could hardly buy some of it by delaying the voting on her reached plan to be later in January.

GBPUSD Daily Chart:

GBPUSD-Daily-13-12-2018 03-13-42 ص.jpg

After forming a lower peak at 1.2670, GBPUSD retreated again to trading currently near 1.1620 in its day number 24 of consecutive being below its daily Parabolic SAR (step 0.02, maximum 0.2) which is reading today 1.2754.
GBPUSD is still also undermined by continued being below its daily SMA50, its daily SMA100 and its daily SMA200.
GBPUSD daily RSI-14 is now referring to continued existence inside the neutral area reading 41.019.
GBPUSD daily Stochastic Oscillator (5, 3, 3) which is more sensitive to the volatility is having now its main line inside the neutral area at 29.802 leading to the upside its signal line which is lower just inside the neutral region reading 21.927.
After positive crossover on forming 1.2476 bottom last Tuesday, following increasing of the downside momentum on breaking out 1.2660 previous supporting level.

Important levels: Daily SMA50 @ 1.2895, Daily SMA100 @ 1.2932 and Daily SMA200 @ 1.3259
Experienced S&R:
S1: 1.2476
S2: 1.2365
S3: 1.2108
R1: 1.2670
R2: 1.2849
R3: 1.2926

Kind Regards
Global Market Strategist of FX-Recommends
Walid Salah El Din
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