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GBPUSD - Drops Through Key 1.32 Level as Brexit Faces Crucial Votes



GBPUSD - Drops Through Key 1.32 Level as Brexit Faces Crucial Votes
The last week or so has seen the GBPUSD fall sharply from an eight month high back down below the key level of 1.32. The few weeks prior were significant as the sterling moved so strongly breaking through the key level for the first time in many months on its way to the eight month high. The fact that the 1.32 level didn’t provide much support may be telling as this level may now well provide some resistance should the sterling attempt to rally higher. 

The other key level presently is 1.27 which is some distance away, however it has supported the currency pair well in recent months.

The sterling enjoyed a very positive January as it has moved from below 1.27 up to a three-month high at the resistance level around 1.32, before a subsequent decline. Starting in mid-December, the GBPUSD had slowly but steadily climbed higher from a two year low below 1.25 up to the current key level of 1.27 and beyond. As expected, it met some resistance from the 1.27 level at the end of last year as multiple attempts to push higher were thwarted and now that it has cleared, you could expect the pound to receive some support from this level should it be called upon.

In early December, the 1.27 level gave way to immense selling pressure, after the sterling was again enjoying much needed support from this level as it had firmly established as a key support level as the currency pair had enjoyed considerable support from this level on several occasions in the few months prior. Should the GBPUSD drop through the support at this level, then it could fall considerably further with no obvious support levels nearby.

With Britain’s deadline to leave the European Union on 29th March quickly approaching, the terms of its separation have yet to be decided, leaving critical questions over the long-term future of London and the rest of the United Kingdom.  Some economists and politicians expect the departure will damage London as a financial centre, while Brexit supporters say it will benefit from being able to set its own rules.  U.K. Prime Minister Theresa May is facing some important votes in the next week that will determine the immediate course of Brexit and the U.K.’s relationship with the European Union (EU).  Next Tuesday, lawmakers will vote a second time on PM May’s Brexit deal after initially rejecting it in January. If the vote is unsuccessful, they will then vote on whether they want to leave the EU without a deal.  The UK's attorney general, Mr Geoffrey Cox says Brexit negotiations will continue as EU officials call for "acceptable" ideas by Friday to break the stalemate.  Mr Cox said talks will "almost certainly" continue through the weekend.  "We are discussing text with the European Union," he said.  "I am surprised to hear the comments that have emerged over the last 48 hours that the proposals are not clear; they are as clear as day, and we are continuing to discuss them."

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