GBP/USD capped below 1.28 handle and correctes slide as dollar consolidates into year end
- GBP/USD is offering form last-minute volatility today, rallying from the 1.2680s to a high of 1.2814 on Brexit noise.
- GBP/USD has started to correct the slide from the 1.28 handle, recovering from a low of 1.2720 and currently trades at 1.2750.
UK Parliament is due to return from the holidays, and there will be a vote in the Commons on PM May's and the EU's agreed withdrawal agreement and the political declaration outlining ambition for future talks. May postponed the vote until January when it became clear her deal would be rejected, leading to widespread anger in the Commons.
A wild ride in the pound
The headlines ever since have been making for a wild ride in the pound and the price action has continued into the last trading day of the year, On one hand, we have had headlines that the odds of Britain leaving the European Union are "50-50" if parliament rejectsTheresa May's Brexit deal. This warning came from Liam Fox warned, the International Trade Secretary, who said that the only way to be "100 per cent certain" that Britain will leave the EU is if MPs vote for the Prime Minister's withdraw agreement. Then, the news of the UK parliament members claiming a ”meaningful vote” to be able to veto post-Brexit trade deals boosted Sterling. However, in recent trade, the dollar has been firmer which sent the pound lower.
The outlook is neutral with RSI now back below oversold territory. However, with the price is below 1.2840, the current December high, the downside is favoured. Below 1.2477 targets the 78.6% retracement at 1.2109. On the upside, the key resistance line at 1.2911.