GBPUSD Analysis 06.12.2018

The British pound rose on Wednesday, extending gains today as mounting opposition to British Prime Minister Teresa Mae's exit deal prompted some investors to start pricing in opportunities to avoid a break-up altogether.

LONDON (Reuters) - Opposition to a British exit deal from the European Union rose on Wednesday after the May government was forced to publish a legal advice that the United Kingdom could be indefinitely closed in the orbit of the European Union.

Parliament has forced Mai to publish a notice from the country's top lawyer on a standby or support mechanism to prevent the return of border controls between British-ruled Northern Ireland and the Irish Republic of the European Union.

The notification stated that "although the declarations in the Protocol are not intended to be permanent and the intention of the parties is clear that they will be replaced by permanent alternative arrangements, under international law, the Protocol will remain indefinitely until it is replaced by the pending agreement."

"In the absence of the right to terminate, there is a legal risk that the UK may become subject to long and repeated rounds of negotiations."

After a series of humiliating parliamentary defeats for Mai a day before casting doubt on their ability to conclude the deal, the US investment bank said. B. Morgan said that Britain's chances of a complete break in the BRICCET have increased.

May is trying to get approval for her deal by the parliament, which shows every sign of her defeat in the vote on December 11. It is not clear what will happen if the deal is rejected as it is due to leave Britain on March 29.

If parliament rejects its agreement, may warned that Britain could leave without a deal or that there would be no exit from the EU at all.

Reverse Breakst?

On Tuesday, just hours before the start of a five-day debate in the British parliament over the May deal for Britain's exit from the European Union, a senior official at the European Court of Justice said Britain could withdraw the official divorce notice.

"It seems that the UK now has the option of unilateral withdrawal, and take a while to choose what to do next," wrote Malcolm Barr, an economist at JPMorgan.

Put a 10% probability of Britain leaving without a deal, down from 20%, and a 50% probability of orderly exit, down from 60%. The chance of no exit at all has doubled to 40% from 20%, indicating perhaps the biggest shift in perception since the 2016 vote of departure.

British Trade Secretary Liam Fox, who supports Britain's exit from the European Union, said it was now possible for Britain to not emerge from the European Union. Fox told a parliamentary committee on Wednesday that there was a real danger that Parliament would try to "steal" BRICST from the British people.

While MAI and main opposition Labor Party members say they respect the 2016 vote to leave, an increasing number of lawmakers in parliament believe the only solution could be a new referendum that gives voters a choice to stay in the European Union.

Technical analysis:

The GBP/USD pair is hovering around the 1.2730 resistance level without being able to confirm its breach, keeping the price stuck between the pivotal levels of resistance mentioned and support 1.2636, waiting for a break to determine the next targets more precisely.

Do not change for the indicators as the price is still below the moving averages of 7-20-50. The Stochastic moved near the oversold area in a sideways move that reflects uncertainty for investors.

We will note that breaching the resistance will push the pair to gain 1.2962 initially, while breaching the support will press the price to continue the medium-term bearish trend with the next target at 1.2500.

Support and resistance:

Support: 1.2730-1.2698-1.2651;

Resistance: 1.2773-1.2823-1.2894.

The trading range for today is expected among 1.2620 support and 1.2820 support.

The expected general trend for today: neutral.