Sterling stays underpinned; awaits further Brexit developments later

Technical Analysis

Author: Justin Low | gbpusd

Cable holds near 1.3200 as we begin enter European morning trade

GBP/USD H1 12-03
The near-term bias in the pair remains more bullish at the moment but price is fading from its highs with long positions being squares as nervousness begins to kick in ahead of the Brexit vote later. As it stands, the government is still looking to push forward with a meaningful vote but whether or not the secured "legally binding" changes touted will be enough to convince parliament, remains to be seen.

But for the time being, the pound is holding on to hope that it would and that is keeping cable underpinned above both key hourly moving averages.

GBP/USD D1 12-03
The daily chart also highlights some key resistance around 1.3260-90 that is helping to keep price gains in-check for the time being. For buyers, it is all about finding a break above the 1.3300 handle today should Brexit developments move in their favour.

The Brexit vote is scheduled to take place around the evening in the UK so expect plenty of headline and rumours to fly about in the morning and afternoon. If May's Brexit deal fails to gather enough support in parliament, the trip lower for the pound later today could be rather catastrophic; considering that there won't be any semblance of a deal even though Brexit is extended.

However, in the bigger picture, odds of a second referendum may then rise and that could help give the quid a bit of support down the road.

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