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GBP/USD struggles to hold recent recovery amid Brexit pessimism

  • With likely same Brexit proposal, the UK PM May might not be able to avoid another humiliating defeat in the British parliament voting.
  • However, Irish support might help Mrs. May to gain a hold at home.
Growing probabilities of PM May’s another failure to let her Brexit proposal through the parliament weigh on the recent GBP/USD pullback as it trades near 1.2730 while heading into the London open on Monday. Traders may now concentrate on political development surrounding the UK PM Theresa May’s Brexit proposal as it will soon be up for voting in the British parliament.

The pair initially rose after the BBC reported that the UK PM Theresa May is likely to ask Tory colleagues to sign off some concessions relating to Brexit in order to lure members of the UK parliament (MPs) vote for her Brexit proposal.

However, the optimism couldn’t last long as traders concentrated more on the failure of cross-party talks and the UK Telegraph’s news report that cited leaked documents to say that Mrs. May’s new Brexit proposal isn’t dramatically different from the previous ones that were being rejected in the parliament.

There was a bit of a relief for PM May as well when Ireland's deputy prime minister, Simon Coveney, said that Ireland won’t renegotiate Brexit agreement if Theresa May is replaced as UK prime minister.

PM May will try reaching out many headline UK lawmakers before her Brexit proposal readies for the vote in the parliament for the week starting from June 03. In doing so, Mrs. May could persuade politicians towards any concessions that can be availed to have the Brexit vote successful.

With the little or no major data/events on the economic calendar, except the Federal Reserve Chairman Jerome Powell’s speech at the Financial Markets Conference, in Florida, investors may keep following political headlines to determine near-term market moves.

Technical Analysis

Unless clearing 1.2770 on a daily closing basis, chances of the quote’s decline to 1.2700 can’t be denied. However, oversold condition of 14-day relative strength index (RSI) might question sellers around then, failure to do so can recall January 15 low near 1.2670 and the 1.2600 back on the chart.

If at all prices manage to surpass February low near 1.2770, 1.2800 and April low near 1.2865/70 could please buyers during further upside.