The UK Parliament has approved a general election on December 12th
After previously approving an early poll to break the Brexit deadlock. This comes after the UK Prime Minister, Boris Johnson, suffered a fresh defeat on Monday, as Parliament rejected his request to call early parliamentary elections, a measure by Johnson to achieve Brexit no matter what.
Last week, the Prime Minister stated that if parliamentarians needed more time to review the Brexit draft, they could. This as long as they agree to hold an early general election. In addition, Johnson has repeatedly expressed his dissatisfaction with the blockades put forth by the opposition. Given that the UK didn’t complete its divorce from the EU, set to happen on October 31st.
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GBP/USD still bullish despite Brexit turmoil
Cable maintains its range-bound on the second day of the week, now quoting below the 1.2900 handle. However, the pair is still trading inside a bullish bias, according to the H4 chart.
There is an ongoing consolidation around the 50 SMA, but this continues to cap further gains across the board. Also, GBP/USD reached the 100% Fibonacci extension of the cycle that started in September, which favours another leg higher towards 1.3196 (161.8% Fibo extension).
To go beyond such a level, the pair should consolidate above the 1.3000 psychological level, which is now a tough nut to crack. Sellers are the strongest force so far in that region. It should also open the doors for a bullish continuation in the mid-term, amidst the Brexit turmoil.
Cable bearish in the short-term?
On the downside, the nearest support lies at 1.2814, where a breakout should produce another leg lower towards the 200 SMA. If such a moving average gives up to the bears’ wave, then it’s likely we will see the GBP/USD falling towards the bullish trend line drawn from the lows of September. Where a strong dynamic demand area is placed.
Both RSI and Momentum oscillators are maintaining their neutral stance, favouring a short-term consolidation in the current stage.