Pound sterling pending an important vote on Brexit
January 15, 2019 3:22 pmVideo
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Today, British parliamentarians will need to make a decision that can determine the scenario for the United Kingdom’s withdrawal from the European Union. The further dynamics of the British currency depend on the voting results in the House of Commons.
The question of whether the country’s Prime Minister Theresa May can get parliamentary approval for her bill on Brexit terms or not is still open.
The further dynamics of the British currency depend on the voting results in the House of Commons.
There are several options for the development of events.
1. Theresa May wins.
If the parliament approves the draft transaction promoted by the head of government, the pound will rise in price against the dollar, as a result of which, the GBP/USD pair will easily reach the level of 1.31 and then continue to rally to 1.35.
2. Theresa May will lose a minimum margin (50 or fewer votes).
This outcome is likely to signal that the position of the Prime Minister is not as weak as it is currently believed, and she has enough support in the government to try to push the deal again.
It is not excluded that Theresa May, herself, will consider this a victory and will continue negotiations with the EU on the mechanism of “bet stop”.
In this case, the pound can strengthen to $1.30, but not more.
3. The head of the cabinet will lose by a large margin.
Losing 100 or more votes will be a serious challenge for Theresa May, and she will have to extend the 50th article of the Lisbon Treaty or withdraw Britain from the EU without a deal. Regardless of what the next steps of the Prime Minister will be, the defeat of May will provoke a sharp drop in the pound exchange rate, which will push the GBP/USD pair below 1.25. The further fate of the British currency will depend on how quickly the head of government announces a backup plan of action and how aggressively the opposition insists on holding early parliamentary elections or a repeat Brexit referendum.
The material has been provided by InstaForex Company – www.instaforex.com
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