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The FxPro Analyst Team

Forex: GBP/USD Hits 8-week Low as UK Parliament Finally Passes Brexit Bill

The UK parliament has passed the Brexit bill. The House of Commons overturned the amendments proposed by the House of Lords that guarantees the rights of EU citizens in the UK and gives parliament a “meaningful vote” on the final Brexit deal, by 335 votes to 287. The House of Lords accepted the decision by 274 to 118.

The UK government now has no hurdles on the way out of the EU, ready to trigger the Article 50 of the Lisbon Treaty.

GBP/USD plunged to an 8-week low of 1.2108 this morning during the European session. The bears broke the near term major support line at 1.2140, and further tested the significant psychological support line at 1.2100.

The downtrend was held temporarily above the level, as the support there is much stronger, which is unlikely to be quickly broken.

However, on the 4 hourly chart, the current price is trading below both the 10 and the 20 SMAs, indicating the upside selling pressure is heavy.

The current trend still remains bearish arising from market concerns over the uncertainty associate with the upcoming Brexit procedure.

The resistance level is at 1.2160, followed by 1.2180 and 1.2200.
The support line is at 1.2140, followed by 1.2120 and 1.2100.

We will see the release of a series of UK economic data, at 09:30 GMT this Wednesday 15th Mar. It includes the Claimant Count Change (Feb), ILO unemployment Rate (Jan), and Average Earnings including and excluding Bonus (Jan).

With better-than-expected figures, it will likely push GBP/USD up and test resistances.
With weaker-than-expected figures, it will likely weigh on GBP/USD and test supports.

On the same day, Wednesday 15th Mar, the Fed will announce its rate decision and monetary policies at 18:00 GMT.

7 out 10 FOMC members, including the Fed doves Yellen and Brainard, made some hawkish comments lately. The US labour market data in February released last Friday outperformed expectations. Per the CME’s FedWatch tool: the current probability of a rate hike in March has jumped to a peak of 95.2%.

We can expect that the Fed will announce two to three rate hikes this year. If the Fed does not adhere to raising rates they are highly likely to face a credibility issue. If the Fed raises rates, the dollar will likely rally again and weigh on the Sterling.

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