The UK parliament has rejected Theresa May’s Brexit deal proposal for a second time on Tuesday evening. This Wednesday and Thursday evening the MPs will vote on whether to have a no-deal Brexit, if that fails, there will be a further vote on whether to postpone Brexit. The chance of a hard Brexit to happen is now increased.
It’s now only two weeks away to the 29th Mar deadline, we still can’t see a clear direction and a solid plan for Brexit deal. The Brexit uncertainties remain high and weigh on the UK’s economic and political outlooks, resulting in great GBP volatility on Tuesday.
On the 4-hourly chart, EUR/GBP has been trading below the downtrend resistance line over the past two months. On 11th Mar, EUR/GBP hit the lowest level of 0.8475 since May 2017 due to Sterling strength.
On 12th Mar, Sterling saw a sharp reverse, lifting EUR/GBP and testing the downtrend resistance line again. Yet the bulls failed to break out, currently EUR/GBP is still trading below the resistance. The results of the two upcoming UK parliament Brexit votes will likely cause volatility to all GBP currency pairs again.
If Sterling drops again, there is a chance of a bullish breakout to happen for EUR/GBP. On the contrary, if Sterling firms, EUR/GBP will likely continue to trade under the resistance line for an extended period.
By Devata Tseng
This article is written by a GO Markets Analyst and is based on their independent analysis. They remain fully responsible for the views expressed as well as any remaining error or omissions. Trading Forex and Derivatives carries a high level of risk.
Sources: Go Markets, MetaTrader4, Tradingview