Brexit on the menu as House of Commons votes: Will GBPUSD rally further?

Brexit on the menu as House of Commons Votes today on Article 50 bill to trigger EU exit process, will the outcome propel a further rally in GBPUSD?

08 February, AtoZForex Great Britain pound enjoyed a late-day rally on Tuesday against the U.S. dollar and euro on the back of hawkish comments from the Bank of England 

According to monetary policy committee Kristin Forbes, based on the current trend of the UK inflation, she might consider voting for a rate increase. Citing resilient employment and output statistics for the region, even in light of Brexit concerns, Forbes expressed concern for the central bank’s tolerance of overshooting inflation targets.

Although she is widely viewed as one of the most hawkish members of the central bank and her views diverge with Governor Carney’s cautious outlook, they were enough to turn the pound around yesterday, driving sterling sharply higher against all of the major currencies.

At the start of the North American trading session, sterling had experienced the sharpest overnight losses on the back of lower house prices but by the end of the day, it was one of the strongest performers.  There are no major economic reports on the U.K. calendar today. However, Brexit is on the menu as House of Commons is set to Vote on the Article 50 bill which seeks to trigger the exit process from the EU. Headlines from this event and risk appetite are expected to be the major driver of the currency’s flows for the day.

GBPUSD Daily Technical Analysis

Brexit on the menu as House of Commons Votes GBPUSD D (Click to zoom)

From the technical perspective, GBPUSD is playing nicely in line with our previously laid down map GBPUSD Technical analysis ahead of BoE: Do we expect more strength?. Price did make it to our 1.2360(retest of broken resistance turned support) levels being watched closely.

Yesterday’s close was instrumental to our medium term outlook as the price did convey a message called a pin bar. The most interesting part of this message being passed across by the cable was that ” the pin pierced and closed above it’s 100-Day Moving Average. this is very very significant going forward as it could propel a rally that could have the GBPUSD aim for 1.3050 (200-Day Moving Average) which is the next major resistance ahead.

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