- Summary:
- New Brexit drama ensues as Scotlands First Minister says Scotland will renew steps at independence so as to rejoin the EU. GBPUSD sees gains capped.
The GBPUSD has seen its intraday recovery truncated on new developments surrounding Brexit. Reports monitored today quote the First Minister of Scotland, Nicola Sturgeon as saying that Scotland will renew attempts at becoming an independent country, which will pave the way for it to rejoin the European Union.
According to Sturgeon, “we need to agree on a process with the UK for a referendum on Scottish independence,” adding “the promises the UK made to fishermen ahead of Brexit will be very hard to deliver,” she said.
Sturgeon further indicated that Scotland would take the necessary steps to ensure a legal and legitimate referendum.
Recall that Scotland had voted to remain in the EU in the June 23 2016 Brexit referendum, which saw a narrow victory for pro-Brexit campaigners. A 2014 independence referendum in Scotland was defeated with 55% asking to remain with the UK.
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Technical Outlook for GBPUSD
Bullish bets on the Pound are now at the lowest levels for the year. This reflects market pessimism towards the outcome of the trade negotiations between the UK and the EU. Last week’s divergent comments by the EU Chief negotiator and the UK PM did little to push back on this pessimism, and the latest comments by Sturgeon look set to add to the bearish outlook for the Pound.
Intraday recovery of the GBPUSD had extended to 1.29461. This move appears to have stalled and the pair has retreated to 1.29412 as at the time of writing. The recovery represents a pullback from the 1.29042 support level which was hit on Friday last week. 1.29932 marks the upside target that corresponds with the triangle’s broken border, and this could be a potential target if the pullback is complete.
Renewal of the bearish move could extend from this pullback area, providing for a possible retest of the 1.29042 price level. Downside breach of this area brings 1.28233 into focus as well as the possibility of the attainment of October 24 and November 11 2019 lows at 1.27851.
On the flip side, an extension of the pullback beyond 1.29932 allows the price to re-enter the triangle, with the possibility of achieving the 1.31754 upside target. This move would have to get propulsion from a remarkable occurrence from the Brexit trade talks or other UK economic data for this week.