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Johnson Handed Yet Another Defeat
The UK Supreme court delivered a defeat to British Prime Minister Boris Johnson, deeming his suspension of parliament unlawful and stating the Queen’s order to suspend parliament should be quashed.
The British pound initially rallied on the news but has pared some gains since. Sterling has been rallying for most of the month as the markets have viewed Johnson’s series of defeats as lessening the probability of a no-deal Brexit.
Commons Speaker John Bercow has asked parliament to “convene without delay” and will be consulting with party leaders.
The spotlight will now be on Boris Johnson. There has been some speculation that there may be a push for his resignation considering that he misled parliament. Johnson could also attempt a second prorogation. However, when asked last week what he would do if the ruling was against him he said: “I have the greatest respect for the judiciary in this county.” This seems to suggest he likely won’t pursue that avenue.
Technical Analysis
GBPUSD 4-Hour Chart rallied on the news of the Supreme Court ruling but has pared some gains. Overhead resistance at 1.2486 has been respected thus far.
The pair is trading in a rising trend channel and is bouncing from the lower bound of it today. I think the initial reaction was not all that bullish and it remains to be seen if the pair can extend gains from here. Resistance at 1.2486 remains a key level in the session ahead.
Another thing to be mindful of is that there is significant overhead resistance in play at the moment. The psychological 1.2500 level is nearby and both the 20-week and 100-day moving averages are in play.
It will take a break below today’s low, however, to confirm a downturn. This low comes in play at 1.2412 and a break of it would mean a downside break of the rising trend channel.
Bottom Line
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GBPUSD 4-Hour Chart has recovered after the UK Supreme court ruled Johnson’s suspension of parliament unlawful.
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Resistance at 1.2486 has capped gains thus far. It will take a break of 1.2412 to signal a bearish reversal.
This article was originally posted on FX Empire