The British Pound fell below 1.27 yesterday after Labour party’s bid to create law preventing a ‘no deal’ Brexit from taking place under the next Prime Minister was defeated in the House of Commons. The first round of voting for Tories to select their new leader takes place today. Even if Boris Johnson is leading the run to become the next British PM, he needs to get through today’s parliament voting with more than 16 votes in order to remain in the race. With the UK’s macroeconomic calendar being empty today, market participants will turn their attention to the parliament voting to figure out the Cable’s next possible destination.
The Sterling attempted to break above 1.2750 yesterday but it failed for the 5th time since May, and closed below 1.27 just above the short-term counter trend line. The bulls need to hold this level, which is also the 50-day moving average, to stay in control and push the Cable higher towards yesterday’s high. However, if the bears successfully break below this trend line, we could see Pound weakening towards 1.2650 or even 1.2615.
Support: 1.2650 / 1.2615
Resistance: 1.27 / 1.2750