The European Court’s decision on the possibility of the UK abandoning Brexit, as well as the publication of the Purchasing Managers Index (PMI) for the UK construction sector, had a positive effect on the pound. In November, the PMI index for the UK construction sector rose to 53.4 from 53.2 in October after a decline in activity over the previous 8 months. IHS Markit also reported that in November, the construction sector showed a generally strong growth, and the pace of job creation in it accelerated to a maximum since December 2015.
On Tuesday, the British Parliament will begin a 5-day discussion of the two documents that make up the Brexit agreement and formulate a way out of the UK from the EU and the future relationship between the UK and the bloc.
According to the Brexit deal, the UK is granted a transition period from March 2019 to December 2020, which can then be extended until December 2022.
Nevertheless, numerous representatives of the Conservative Party, as well as some representatives of the opposition, subjected the draft agreement to harsh criticism. Many members of the Conservative Party of Parliament oppose the Brexit plan agreed by the UK and the EU.
Voting on a deal with the EU in the House of Commons of the British Parliament is scheduled for December 12.
Many experts say that if the parliament refuses to approve the agreement, GBP / USD will fall into the range of 1.2000 - 1.2500, and if the lawmakers support the deal, it will quickly grow to 1.3500 - 1.4000.
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Support and Resistance Levels
Positive news supported the pound on Tuesday, allowing the GBP / USD pair to rise to 1.2840 at the beginning of the European session.
Nevertheless, the further strengthening of the pound and the growth of the GBP / USD is unlikely. Until December 12, investors will avoid major deals on the pound.
There are risks that in case of the parliament’s refusal to approve the Brexit agreement, the GBP / USD pair will fall into the range of 1.2000 - 1.2500.
The signal for the development of this scenario will be the breakdown of the local support level of 1.2700 (August and October lows).
The main trend is still bearish. Below the key resistance levels of 1.3210 (Fibonacci level 23.6% of the correction to the decline of the GBP / USD pair in the wave that started in July 2014 near the level of 1.7200), 1.3140 (ЕМА200 on the daily chart) negative dynamics prevail.
Short positions are preferred.
Support Levels: 1.2785, 1.2700, 1.2600, 1.2500, 1.2365, 1.2110, 1.2000
Resistance Levels: 1.2885, 1.2920, 1.3030, 1.3140, 1.3210, 1.3300
Trading scenarios
Sell in the market. Stop Loss 1.2890. Take-Profit 1.2700, 1.2660, 1.2600, 1.2500, 1.2365, 1.2110, 1.2000
Buy Stop 1.2890. Stop Loss 1.2780. Take-Profit 1.2920, 1.3030, 1.3140, 1.3210, 1.3300, 1.3400, 1.3500, 1.3600, 1.3760
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