Sterling is in focus today ahead of the EU Membership Court Ruling which may drive the pair further up. Today, at 9:30 London time, the U.K. Supreme Court will announce who will rule on U.K. Prime Minister Theresa May’s Brexit plan. The hearings started on December 5, and it has been the biggest case in the 7-year history of the court. The decision will be whether P.M. May should seek lawmakers’ approval before any official Brexit agreement or she will be able to trigger Article 50 of the EU’s Lisbon treaty by herself with amendments. It’s worth mentioning that May is likely to pull U.K. out of EU’s single market in return to have the full control of the immigration between the U.K. and the European Union.
The GBP/USD pair extended its gains and it surged sharply higher more than 2.2% the last four days. The cable printed the fourth green consecutive day and broke the descending trend line, which was holding since September 2016, to the upside. The next level to watch is the 1.2635 resistance barrier in the case that the Court vote in favor of Parliament’s approval in triggering Article 50.
The euro was traded lower against the British pound on Monday and fell more than 0.7%, mainly driven by British pound. The EUR/GBP pair is developing above the ascending trend line, holding since June 2016, and is ready to retest it from the upside near the 50 and the 200-SMAs on the daily chart.
The FTSE100 index plummeted more than 1.2% over the last trading sessions as the downward pressure remains. The cash index recorded the fourth red day in a row over Monday’s period and hit a fresh three-week low at 7126 price level. Our expectation is a downside move until the 7060 support barrier, or moreover until the 23.6% Fibonacci retracement level of the last big upward move (June 2016 low – January 2017 high).
